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[LONDON] European shares recovered to finish slightly higher on Wednesday as a late surge in oil prices helped offset pressure on the broader market from a spate of weak earnings updates.
Oil futures surged 5 per cent, having opened lower, after Russia referred to possible co-operation with other major oil producers and as US data showed a spike in demand for products such as heating oil last week when heavy blizzards hit.
That helped the oil and gas sector rise 1.1 per cent, and helped the pan-European FTSEurofirst 300 close up 0.4 per cent at 1,340.76 points. "The threat of the early sell-off for oil prices this morning failed to materialise with crude bouncing above the US$30 mark and this has in turn lent a raft of support to equity markets," said Tony Cross, market analyst at Trustnet Direct.
Britain's Sage was the top riser on the index, up 7.5 per cent after posting a solid set of results after a strong first quarter.
However, Royal Bank of Scotland dropped 2 per cent after the bank warned its profits would be hit by a pension charge and US litigation provisions.
A forecast of lower revenues from iPhone maker Apple also hit European technology and chipmaker stocks such as ARM and Dialog.
Novartis fell 3.7 per cent after its fourth-quarter core net income missed expectations, while BASF declined by 1.8 per cent after issuing a profit warning. "We're only just getting under way on the European earnings front, but it's been a pretty mixed bag so far with weak updates from Novartis and BASF," said Clairinvest fund manager Ion-Marc Valahu.
Sweden's Ericsson dropped 6.3 per cent, even after operating profit beat consensus. Analysts said that underlying negative growth was a concern, while the gross margin was narrower than expected.
"Underlying looks slightly weaker than expected... we believe consensus sales and GP estimates for 2016/2017 are likely to see downward revision of 2 to 3 per cent," analysts at Credit Suisse said in a note.
Elsewhere in Scandinavia, TDC dropped 9.6 per cent after the Danish telecom operator scrapped its dividend following a deterioration in its financial results.
Italy's FTSE MIB equity index underperformed, down 0.4 per cent, even though Italy reached a deal with the European Commission to help Italian banks sell some of their 200 billion euros of bad loans.
Traders said that while the deal was a step in the right direction, the mechanics on how it would work were unclear and could be costly for the banks.