April 2, 2014 / 10:56 AM / in 4 years

Car makers help European shares rise for 7th straight day

* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 up 0.1 pct

* Auto makers help indexes stretch rise into 7th session

* Deutsche Post boosted by strong outlook

* ADP data disappointment would cause volatility - SocGen

By Francesco Canepa

LONDON, April 2 (Reuters) - European shares looked set to stretch their winning streak into a seventh straight day on Wednesday as U.S. car sales data boosted auto stocks and underpinned optimism about demand from Europe’s largest trading partner.

The STOXX Europe 600 Auto & Parts index rose 0.7 percent after data showed car makers reported a 5.7 percent annual rise in U.S. sales in March, which could help them offset still muted demand in Europe.

Sports-car maker Porsche, which saw its U.S. sales rise 9.2 percent in March, added 1.5 percent. BMW , which derives 17 percent of its revenue from the United States, its largest market, rose 1.4 percent after reporting a 7.9 percent increase in U.S. sales.

“With better U.S. sales you can compensate for weaker sales in Europe,” said Michael Punzet, auto analyst at DZ Bank. “Clearly the premium manufacturers like BMW, Mercedes, Audi and Porsche are best positioned to benefit from the U.S.”

The car sales figures build on upbeat U.S. factory activity data published on Tuesday, which helped send a key euro zone index to its highest closing level since September 2008 on optimism about demand from the United States, the world’s largest economy.

The data also set a positive backdrop for the release of U.S. jobs data later this week, including non-farm payrolls on Friday.

“The U.S. is in a much better place than people were thinking,” said Manish Singh, strategist and head of investments at Crossbridge Capital, who is long U.S. and European equity indexes.

“I expect the U.S. jobs report to be beat on Friday and I wouldn’t be surprised if it was a strong beat, but even an in-line number or a small beat would be positive.”

The Euro STOXX 50 was up 0.1 percent at 3,189.83 points at 1018 GMT, testing a 5-1/2 year high set on Tuesday.

The pan-European FTSEurofirst 300 rose 0.2 percent to 1,344.03 points, having rallied 3.7 percent over the previous six sessions.

Deutsche Post, the world’s biggest postal and logistics group, was among top gainers as it rose 3.6 percent on the back of a bullish guidance update.


The U.S. ADP employment numbers, due at 1215 GMT, may affect market direction later in the session as investors try to gauge the strength of the U.S. labour market ahead of the non-farm payrolls release on Friday.

The ADP National Employment Report is expected to show private employers added 195,000 workers in March, up from February. Societe Generale analysts said a disappointing figure would send shockwaves through the market.

“We expect the ADP National Employment Report to trigger yet another bout of market volatility ahead of the (NFP) on Friday,” SocGen said in a note, adding they expect 150,000 net new jobs.

Traders said the Federal Reserve’s renewed commitment to keep an ultra-easy monetary policy might mitigate the market impact of any disappointment in the data.

The market was growing more confident that the European Central Bank would also take further steps in coming months to stimulate the euro zone economy, such as adopting negative overnight deposit rates, after lower-than-expected inflation data and producer prices this week.

The ECB holds a policy meeting on Thursday although it may hold off on action for now.

“It’s not possible to predict if it will be this Thursday but we imagine that in Q2 or Q3 there is a good possibility of further monetary stimulus from the ECB and we think that will take the form of negative overnight rates,” Lorne Baring, managing director of wealth management firm B Capital, said.

“The combination of monetary stimulus (and) lower macro risk perception ... indicate that stocks will get some tailwind from that.”

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

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

Today’s European research round-up

Additional reporting by Alistair Smout; Editing by Susan Fenton

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