High German business morale lifts mood

European shares rose in a broad-based rally yesterday as investors took advantage of the previous session’s steep falls to pick up equities at cheaper prices. Data showing that German business morale surged at its fastest pace in over two years in February helped brighten the mood.

Some traders cited some caution given the uncertainty posed by this weekend’s elections in Italy, while dealers also noted occasional jitters that the upward momentum that has been enjoyed for much of this year may peter out.

DUBLIN

After a couple of softer days, the Iseq index climbed 2 per cent yesterday, outperforming the major European indices.

This was largely thanks to the performance of cement-maker CRH, the largest component of the index, which advanced 4.9 per cent to €16.17, on a good day for construction stocks across Europe.

Investors also reckoned the stock would benefit from an improving business environment in the US.

There was a warm response to news that pharmaceutical group Elan will hold a $1 billion share buyback. Its share price closed at €7.97, up 4.2 per cent.

The buyback – which is equal to about 16 per cent of its market value – follows the sale of its stake in the multiple-sclerosis drug Tysabri to Biogen.

Ryanair did not join in the market uplift and closed flat at €5.68, while Paddy Power fell fractionally to €64.73.

Buyers floated around paper and packaging group Smurfit Kappa, which closed up 1.9 per cent at €11.66, while industrial holdings group DCC also attracted some trading activity, finishing the day at €26.76, up 1.4 per cent.

LONDON

The FTSE 100 Index of blue-chip shares advanced 0.7 per cent at the close of trading for a weekly gain of 0.1 per cent.

UK stocks briefly pared their advance as the European Commission forecast that the combined economy of the 17 nations in the euro area will contract in 2013.

A gauge of construction-related shares posted the biggest gain of the 19 industry groups on the Stoxx Europe 600 Index, gaining 2.2 per cent.

Balfour Beatty, the UK’s largest housebuilder, advanced 1.9 per cent to 282.8 pence.

Antofagasta, the metals producer owned by Chile’s Luksic family, climbed 1.6 per cent to 1,084p, while Evraz, the Russian steelmaker partly owned by Roman Abramovich, added 1.3 per cent to 270.1p.

J Sainsbury gained 2.1 per cent to 345p, advancing for a third day. The UK’s third-largest supermarket group was raised to buy from neutral at Citigroup. Security group G4S fell 0.9 per cent to 287.1p.

EUROPE

National benchmark indexes rose in all of the 18 western European markets except Iceland. Germany’s DAX added 1 per cent, while France’s CAC 40 rallied 2.3 per cent.

Valeo gained 2.3 per cent to €41.46. France’s second-biggest car-parts maker reported earnings that beat analysts’ expectations.

Fuchs Petrolub rose 5.9 per cent to €60.38, its highest price since at least October 1998. The maker of automotive lubricants reported 2012 net income that beat projections.

Preferred shares of Volkswagen dropped 7 per cent to €163.80. Europe’s largest car-maker is targeting earnings before interest and taxes this year at the same level as 2012.

US

Strong earnings from big US companies have pushed the Dow Jones industrial average to a rare triple-digit gain, but the SP 500 index still posted its first weekly loss of the year.

Hewlett-Packard had the biggest gain in the Dow and the S 500 index. It posted fiscal first-quarter earnings that beat all forecasts, a relief after months of bad news for the computer maker. HP shares rose 12.3 per cent to $19.20.

American International Group rose after its fourth-quarter operating results exceeded analysts’ forecast, up 3.1 per cent to $38.45. – (Additional reporting: Bloomberg/Reuters)