Europe: Shares come off highs, Aegon rallies

[MILAN] European shares rose on Wednesday, led by Dutch insurer Aegon following a business update, with better-than-expected Chinese trade data also providing support.

Gains made earlier in the session were reduced when some investors took profit, underlining the fragility of sentiment after a rocky start to the year due to fears over a slowdown in China. "We are in a very volatile phase and it's not that surprising that any gains trigger profit taking. Europe is weighed down by a weak start at Wall Street," said Giuseppe Sersale, fund manager at Anthilia Capital.

The pan-European FTSEurofirst 300 rose 0.2 per cent to 1,352 points by 1536 GMT, extending Tuesday's gains. Earlier in the session the index hit a high of 1,374 points. Germany's DAX dipped into the red to fall 0.3 per cent.

Worries over the pace of economic growth in China caused the FTSEurofirst index to dip to a three-month low on Monday after in four straight sessions of declines.

Commodities-related stocks were in demand as metals and oil prices rose. The European mining and energy indexes gained 1.5 per cent and 2.4 per cent respectively, helped by rises in Rio Tinto, BHP Billiton, BP and Royal Dutch Shell of between 1.1 and 5 per cent.

Aegon surged 9.6 per cent, making it the biggest gainer in the pan-European FTSEurofirst 300 index. The group provided an update on its strategy, gave financial targets and said it will increase its profitability and capital returns.

Earlier on Wednesday, sentiment was lifted slightly after data showed China's total trade fell far less than expected in December. Exports fell 1.4 per cent from a year earlier, compared to a forecast 8 per cent drop and a 6.8 per cent decline in November.

China's central bank held the line on the yuan for a fourth straight session, calming fears of a sustained depreciation. Having been alarmed by a near 5-per cent slide in the currency since August, investors appeared relieved by the relative calm.

"Markets seem to be stabilising and moving higher as sentiment is turning. The yuan is no longer moving lower, but each and every piece of data from China will be looked at with much attention," BNP Paribas Fortis Global Markets' head of research, Philippe Gijsels, said. "Going forward, the market will focus on the earnings season that is unfolding. European earnings momentum should be reasonably strong and be supportive for the market." Among standout gainers, Sodexo rose 2.6 per cent after the food services and facilities management group posted organic revenue growth of 4.7 per cent for the first quarter of 2015/16.

European companies' earnings are expected to grow at their fastest rate in four years, significantly outpacing their US peers as a weaker euro and signs of economic recovery swell profit margins.

REUTERS