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European shares rise early, helped by Swiss Life
August 13, 2014 / 8:46 AM / 3 years ago

European shares rise early, helped by Swiss Life

* FTSEurofirst 300 up 0.4 pct, Euro STOXX 50 up 0.8 pct

* German shares’ P/E ratio hits lowest since Oct 2013

* Market seen range-bound ahead of France, Germany GDP

By Blaise Robinson

PARIS, Aug 13 (Reuters) - European stocks gained ground in early trade on Wednesday, helped by forecast-beating results from bellwethers such as Swiss Life and Salzgitter .

However, worries over the Ukrainian crisis and weak economic data from Asia limited the market’s rebound from a recent sharp slide.

Shares in Swiss Life rose 3.5 percent after Switzerland’s largest dedicated life insurer beat expectations with a slight rise in first-half net income, buoyed by a strong performance in its home market.

E.ON rose 4.9 percent after Germany’s biggest utility posted better-than-expected results, although core earnings fell, hit in part by a weak economy and currency in Russia, the group’s main foreign market.

At 0814 GMT, the FTSEurofirst 300 index of top European shares was up 0.4 percent at 1,325.73 points, trimming recent steep losses. The benchmark index is still down about 5 percent since mid-June.

“The market is range-bound for now, with the focus on the tense situation in Ukraine, as well as on GDP figures for Germany and France due tomorrow,” said Alexandre Baradez, chief market analyst at IG France.

“There’s a lot of confusion about the Russian humanitarian convoy heading to Ukraine. People fear that if blocked, it could give Russia an excuse to send troops to Ukraine.”

A Russian convoy of trucks carrying tonnes of humanitarian aid was heading for eastern Ukraine on Wednesday, where government forces are closing in on pro-Russian rebels, but Kiev has said it would not allow the vehicles to enter Ukraine.

Fighting in Ukraine and Western sanctions against Russia, a major energy supplier to Europe, have muddied the forecasts of a number of multinationals including Henkel, Adidas and Rheinmetall.

Germany’s DAX share index has been particularly hard hit, losing as much as 11 percent between mid-June and last week.

The German market’s underperformance has dragged down the average price-to-earnings ratio of local shares to a level not seen since October 2013, according to data from Thomson Reuters Datastream.

The MSCI Germany index trades at 12 times expected earnings while the MSCI Europe trades at 13.6 times earnings, making Germany’s P/E ratio relative to Europe the cheapest in nearly 10 years.

The DAX was up 1 percent on Wednesday, while France’s CAC 40 was up 0.9 percent and UK’s FTSE 100 index was 0.1 percent higher.

Salzgitter, Germany’s second-biggest steelmaker, gained 2.4 percent after reporting an unexpected second-quarter pretax profit as cost cuts at the group helped offset the effects of overcapacity in Europe’s steel market.

On the macro front, data showed the amount of money flowing into China’s economy slowed to the lowest level in nearly six years in July, while Japan’s economy suffered its biggest contraction since the devastating March 2011 earthquake in the April-June quarter.

Europe bourses in 2014: link.reuters.com/pap87v

Asset performance in 2014: link.reuters.com/gap87v

Today’s European research round-up

Editing by Susan Fenton

Our Standards:The Thomson Reuters Trust Principles.
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