July 23, 2014 / 8:37 AM / 3 years ago

Better earnings provide support for European shares, led by Daimler

* FTSEurofirst 300 up 0.2 percent

* Daimler boosted by Mercedes sales boost

* AkzoNobel, Capita and Telenor all rise after results

* ABB a laggard as power unit falters

By Alistair Smout

EDINBURGH, July 23 (Reuters) - European stocks rose on Wednesday on the back of generally strong earnings despite investors’ concerns over the possibility of fresh European Union sanctions against Russia over the Ukraine crisis.

German blue chip shares outperformed, gaining 0.5 percent, led higher by car and truck maker Daimler after it posted earnings above expectations.

Daimler rose 2.2 percent, boosted by demand for new models of its high-end Mercedes-Benz cars in countries such as China.

“Daimler’s results read very well. Appetite for Western brands, including Mercedes, is huge in China,” said Joe Rundle, head of trading at ETX Capital, who returned from a trip to China last week.

“In China, every second car seemed to be a German car. You want to be long (on) big car makers which are going to continue to expand out there.”

Daimler contributed more points than any other individual stock to a 0.2 percent rise on the pan-European FTSEurofirst 300 index, which stood at 1,376.98 points.

Paints and chemicals firm Akzo Nobel rose 4.3 percent after its own higher-than-expected second-quarter earnings, while Telenor and Capita both gave upbeat outlooks with their solid results.

Telecoms firm Telenor and outsourcer Capita rose 3.5 percent and 2.7 percent respectively.

The reports continued a trend which has seen STOXX Europe 600 companies beat expectations by 4.9 percent on aggregate so far this earnings season, according to Thomson Reuters Starmine data.

Not all earnings news was positive. Swiss engineer ABB was down 1.7 percent after it reported a bigger-than-expected fall in second-quarter net profit, hit by a weak performance in its power systems unit.

“Despite ABB consensus FY‘14 EPS estimates having fallen 22 percent since January 2014, with another miss to consensus expectations we would expect further mid-high single digit FY‘14 EPS cuts to consensus,” analysts at Espirito Sant wrote in a research note.

Also prompting caution was the Ukraine crisis after the EU raised the prospect of restricting Russian access to European capital markets, defence and energy technology.

Stock markets have been under pressure since late last week, when a Malaysian plane was downed over east Ukraine, in an attack that the West has blamed on Russian-supported rebels.

“The market is worrying about a serious escalation, but I believe there’s a fairly small chance of that. With the earnings being better, that’s giving traders a reason to be positive despite the uncertainty,” Rundle said.

Elsewhere, focus was on the ongoing conflict in the Gaza Strip, where Israeli forces pounded multiple sites and said it was meeting stiff resistance from Hamas Islamist militants.

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

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

Today’s European research round-up (Editing by Gareth Jones)

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