Europe: Shares edge higher, Altice and Socgen falls weigh

[LONDON] European shares crept higher on Friday, with new records hit in London and Frankfurt, though earnings from French bank Societe Generale and Dutch telecoms group Altice weighed on their sectors and limited gains.

The pan-European STOXX 600 index was up 0.3 per cent, a second week of gains in a row, with Germany's DAX hitting a new high, up 0.3 per cent.

Britain's FTSE 100 built on the previous session's gains following the Bank of England's first rate hike in more than a decade and also reached a record level, with a 0.1 per cent rise.

Friday was another busy day of earnings, with the banking sector in focus. Societe Generale fell 4.1 per cent after the lender reported third quarter earnings which included a 15 per cent slump at its investment banking arm.

Weak trading has been an issue across the sector, with peer BNP Paribas dropping earlier in the week on the back of a slump in fixed income trading.

"These weaker results add pressure on (SocGen) to deliver a substantial revamp at the investor day on 28 November, otherwise it will become a value trap," analysts at Jefferies said in a note.

Spain's IBEX was one of the few bourses in Europe to close in negative territory with a 1 per cent decline as Spanish banks suffered heavy losses. Banco Sabadell and Banco Santander lost 2.7 per cent and 1.9 per cent respectively.

Telecoms firm Altice was the biggest loser across Europe with a 22.6 per cent collapse, as investors fretted about the Amsterdam-based group's ability to recover market share in France.

"Investors are realizing the company is struggling too much in France," said Javier Borrachero, an analyst at Kepler Cheuvreux.

Shares in Air France-KLM fell 7.5 per cent on concerns about its cost cutting targets.

Lufthansa lost 0.2 per cent, while IAG was down 1.5 per cent and easyJet 1.2 per cent.

Wind turbine maker Vestas Wind took an 8.8 per cent hit and Siemens Gamesa fell 3.5 per cent after the proposed US tax reform bill included cuts to renewable energy tax credits.

On the positive side, Norwegian consumer publishing firm Schibsted surged 20.5 per cent to the top of the STOXX after its results came in above forecast.

France's Renault rose 3.9 per cent, leading European autos, after the French government took down its stake in the carmaker to 15 per cent.

Tech stocks were also in focus after US giant Apple reported better-than-expected earnings, boosting shares in suppliers Dialog Semiconductor and AMS by 2.3 per cent and 3.2 per cent respectively.

More than half of MSCI Europe companies have reported third quarter earnings, of which 67 per cent have either met or beaten analysts' expectations, according to Thomson Reuters I/B/E/S data.

"Those (smaller beats) and the big beats, once you add them all together, makes it actually a fairly good earnings season, hence why markets are where they are," said Mike van Dulken, head of research at Accendo Markets.

REUTERS