European shares creep higher, oil stocks and miners rise

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* STOXX 600 up 0.2 pct

* Euro zone business activity hits 6-year high

* Wood Group, Amec Foster Wheeler up on increased deal synergies

* Petrofac hit by broker downgrades

* ISS rises on U.S. acquisition

By Helen Reid

LONDON, April 5 (Reuters) - European shares struggled to find direction on Wednesday, making slight gains as strength in oil and basic resource stocks outweighed weaker autos and healthcare sectors.

The pan-European STOXX 600 index was up 0.2 percent by 0925 GMT.

Euro zone businesses had their best quarter in six years, construction purchasing managers’ indexes showed, with individual countries’ data also improving, indicating broad-based growth in economies across Europe.

Though major indexes were little changed after the data, it added to an improving picture for investors looking at European equities.

“It’s the most positive economic backdrop that we have seen since Mario Draghi’s been head of the ECB,” said Mike Bell, global market strategist at JP Morgan Asset Management.

“Investors are not fully pricing in that improvement in economic fundamentals, perhaps understandably because of political concerns,” he added, noting caution around the French election.

“We think that now is a good opportunity to be buying European equities while others are still fearful.”

Merger and acquisitions deals continued to drive European stocks.

Danish business support services firm ISS was a top gainer, up 2.9 percent after saying it would buy U.S. catering firm Guckenheimer for 1.5 billion Danish crowns ($222.3 million).

Oil services groups Wood Group and Amec Foster Wheeler were up 2.8 and 2.5 percent respectively, after Wood Group said it expected about 36 percent more cost savings from its deal to buy Amec for 2.2 billion pounds ($2.7 billion).

“Wood Group’s increase to the synergies estimate from this deal is in line with our expectation that the original $134m target materially underestimated the opportunities for cost savings,” said RBC oil services analyst Victoria McCulloch.

Chipmaker AMS was the top gainer, up 4.8 percent. Broker Northern Trust said Apple’s decision to drop Imagination Tech from supplying its graphics technology was probably a one-off, and should not be read across to peers AMS and Dialog Semiconductor.

Swedish industrials firm Alfa Laval was among top gainers, up 3.2 percent after it won a 125 million Swedish crown order for marine exhaust gas cleaning systems.

While peers Wood Group and Amec Foster Wheeler enjoyed the limelight, Petrofac was a top faller, down 3.4 percent after broker downgrades from Deutsche Bank and Bernstein. Deutsche Bank cited a “dislocation” between contracting outlook and valuation.

Outdoor advertising company JCDecaux dipped 3.3 percent after JP Morgan cut it to “neutral” from “overweight”, saying contract losses such as the Velib Paris bicycles contract, and a slow recovery to profitability for major contracts suggested limited earnings upside.

Autos stocks were again the worst-performing sector, down 0.5 percent.

Finnish utility Fortum and Swedish engineering company Skanska were top fallers after going ex-dividend. (Editing by Alison Williams)