Best day in 3 weeks for European shares as euro falls, all sectors rise

[MILAN] European shares ended the week on a strong note as a drop in the euro helped shares in exporters, while investors also focused on a raft of company results with insurance firm Swiss Re hit after missing profit estimates.

The regional STOXX 600 index was ended with a gain of one per cent, rallying into the close with all sectors in positive territory as the euro - a source of pain for the index over the past months - eased and the US dollar gained following a strong US jobs report. Euro zone blue chips rose 1.2 per cent.

A robust US non-farm payroll reading could support the case for the Federal Reserve to tighten monetary policy further.

While both Germany's DAX and Britain's FTSE 100 also gained, the STOXX also posted its first weekly gain after two weeks of losses.

"The decline in the pound and the euro accelerated the move higher in the FTSE 100, DAX and CAC 40," David Madden, market analyst at CMC Markets UK, said.

While gains among financials and overseas-earning consumer staples firms were the biggest boost to the STOXX, Petrofac was the top individual gainer, jumping 8.8 per cent after its joint venture won a US$2 billion refinery contract.

GEA shot 8.7 per cent higher on news that Albert Frere, Belgium's richest man, holds a stake of just over three per cent in the company.

Elsewhere the attention centred firmly on earnings.

Nearly two thirds of the companies listed on the MSCI Europe index have already released results.

Of them, 61 per cent have either beaten or matched expectations with second-quarter earnings growth expected at more than 22 per cent, according to Thomson Reuters data.

Swiss Re was the biggest single drag on the STOXX, down around three per cent after the world's second-largest reinsurer reported a bigger than expected 35 per cent drop in first-half net profit as claims from natural disasters weighed.

Baader Helvea analyst Daniel Bischof said the results were weak with all its units apart from Life & Health clearly missing estimates and Property and Casualty showing a worrying dynamic.

"There are still no signs of a broader-based stabilisation,"said Mr Bischof, adding however that after its underperformance relative to the sector, the stock look increasingly appealing.

The analyst has a hold rating on the stock.

Andritz also dropped more than 6 per cent after revenues at the Austrian engineering group fell more than expected in the second-quarter, prompting the company to lower its outlook for 2017.

British homebuilders such as Taylor Wimpey and Persimmon fell sharply. Traders cited media speculation that the government could review the "help to buy" scheme to support home ownership among first-time buyers.

REUTERS