Europe: Publicis leads as earnings dominate trading session

[LONDON] Advertising group Publicis and industrial stocks led European shares on Thursday as strong results spurred them higher, while the main indexes stalled, showing signs of fatigue after a two-day rally took them to six-week highs.

The pan-European Stoxx 600 index ended flat, while European bourses closed little changed - Paris' CAC 40 was up 0.21 per cent, while Germany's DAX lost 0.17 per cent.

With no major macroeconomic news, earnings dominated trading and Publicis led the pack with its shares rising to the top of the Stoxx after delivering a first-quarter sales beat helped by a rebound in North American activities.

Its shares jumped 7.3 per cent, boosting the media sector.

"The fact we have now had a second agency group (after US firm Omnicom on Tuesday) report top-line positive organic revenue growth should reassure", Liberum analysts said.

Publicis' British rival WPP also gained 3.6 per cent as the results helped improve sentiment towards agencies.

Industrial groups also shone, with Swiss industrial equipment maker ABB rising 4.6 per cent after reporting its best start to the year since 2015, while rival Siemens rose 1.4 per cent.

There was also disappointing news on the earnings front, though, with the results of Philip Morris in the United States triggered falls across the tobacco sector in Europe. British American Tobacco and Imperial Brands shed 5.4 per cent and 2.9 per cent respectively.

Novartis shares fell 1.9 per cent as Baader Helvea analysts pointed to a weaker first-quarter performance for its Sandoz unit in the United States, and lower than expected profitability in the Innovative Medicine segment.

Results from Nestle and Unilever, meanwhile, reignited concerns about large consumer goods firms'pricing power .

Unilever declined 2.1 per cent and Nestle ended up 0.2 per cent.

"We expect chronically weak pricing from both Unilever and Nestle to play to the market's fears of weak pricing power, fuelled by channel shift, in the face of rising commodities,"said Jefferies analysts in a note.

Tech stocks also held the Stoxx back, with chipmakers AMS , Siltronic, STMicro, and ASML down between 3 and 6 per cent after Taiwan Semiconductor reported weaker than expected results.

Merger and acquisition news also drove some big share price moves. Shares in Britain's Shire jumped 5.9 per cent as Botox maker Allergan and Japan's Takeda Pharmaceutical entered competing talks to acquire it, in a deal set to top US$60 billion.

Weir Group shares jumped 6.2 per cent to the top of the Stoxx after the firm agreed to acquire US mining tools maker ESCO for US$1.05 billion.

REUTERS