Europe: Flat shares helped by positive earnings updates

[LONDON] European shares were steady at 14-month highs on Wednesday, supported by well-received earnings updates from companies such as Lloyds, Telefonica Deutschland and Scor.

The pan-European STOXX 600 index ended flat after setting an intra-day high of 375.42 points, its highest level since early December 2015. Germany's DAX was up 0.3 per cent after hitting levels not seen since April 2015.

Lloyds, the second largest British listed bank to post earnings this week, was a top gainer, up 3.3 per cent after impressing investors with profits rising to a ten-year high.

Telefonica Deutschland rose 2.2 per cent after it reported better-than-expected core profit for the fourth quarter and raised its target for synergies from its acquisition of E-Plus, while French insurance company Scor rose 3.2 per cent after it raised its dividend and said it planned share buybacks due to a 5.4-per cent increase in premiums.

Unilever rose 5.7 per cent, making its shares the biggest gainers on the FTSE 100 index, after saying it was reviewing its options to drive shareholder value, days after rejecting a US$143 billion-bid from Kraft-Heinz.

A source close to the group said the review should be completed by April and could lead to asset sales and cost cuts.

ThyssenKrupp was also a top gainer, up 4.6 per cent after the German industrials and steel company said it had sold its Brazilian steel mill to Ternium, ending five years of unsuccessful efforts by the German company to exit Latin America's largest economy.

Fresenius Medical added to the strong German stock performance, up 1.6 per cent after the healthcare group said 2016 sales rose 5 per cent, adding that it has targeted double-digit annual gains by 2020.

The disposal price, 1.26 billion euros (S$1.88 billion), was above UBS analysts' estimates. "For us, it is an important step forward to clean up ThyssenKrupp's comprehensive business portfolio and reduces earnings volatility going forward," they wrote in a note.

Ericsson was up 3.3 per cent, extending Tuesday's gains on speculation that US telecoms giant Cisco could buy the Swedish tech company, and on a positive note from Haitong Research, which started covering the stock on a "buy"rating, saying catalysts over the next two years could cause Ericsson's share price to double.

Italy's blue-chip index underperformed its European peers, dipping 0.8 per cent as asset manager Mediolanum fell 3.2 per cent after a target cut from Kepler Cheuvreux on concern over a possible fall in 2018 performance fees.

The shares, which plunged on Tuesday after the CEO flagged the risk, came off initial lows after the company said it would charge higher recurring fees to help offset the expected drop in performance income.

Sector peers Azimut and Banco BPM were among top European fallers, down 3 and 4.2 per cent respectively.

Weir Group was the biggest STOXX faller, dropping 8.9 per cent. The maker of pipes and valves for energy and mining industries reported a 22-per cent fall in full-year pretax profit, hurt by a weak North American oil and gas market.

REUTERS