PARIS: European shares inched higher yesterday, moving back towards a near two-year high hit recently, although a bout of profit taking on bank and insurance shares limited the market’s rise. Corporate results were in the spotlight, with shares of Unilever gaining 3.1 percent to a record high after the Anglo-Dutch consumer goods group posted better-than-expected sales.
Novartis added 4.1 percent after the Swiss pharmaceuticals group unveiled a reassuring sales growth forecast. The FTSEurofirst 300 index of top European shares closed 0.2 percent higher at 1,167.65 points, just a few points below a peak of 1,170.29 points hit two weeks ago, a level not seen since early 2011.
However, the euro zone’s blue chip Euro STOXX 50 index fell 0.3 percent to 2,708.28 points, dragged down by a fall in financial shares after lofty gains so far this year. Banco Popolare fell 4.1 percent, Credit Agricole lost 2.5 percent and Aegon shed 2.2 percent.
Despite the day’s losses, the STOXX euro zone banking index is still up 10 percent in 2013, by far the best sector performance. “The newsflow on the political and macro side is very thin, so there’s a bit of hesitation to chase the market higher and we’re seeing some rotation between sectors,” Saxo Banque senior sales trader Alexandre Baradez said.
Around Europe, UK’s FTSE 100 index ended up 0.3 percent and Germany’s DAX index closed 0.2 percent higher, whereas France’s CAC 40 dipped 0.4 percent, and Italy’s FTSE MIB dropped 0.8 percent. Following the DAX’s outperformance last year, Societe Generale strategists recommend a ‘long/short’ pairs trade with a long position on the CAC and a short position on the DAX to take advantage of the combination of more attractive valuation levels for French stocks and the likelihood of a further drop in the risk premium in Europe.
While the DAX has almost reached 2007 levels, the CAC is still about 40 percent below its 2007 highs. Some analysts, however, say Germany is still attractive and see other pockets of value in European equities.
Investors have been scooping up European shares in the past two months - with the Euro STOXX 50 surging 12 percent since mid-November - as fears about a potential break-up of the euro zone abated while global macroeconomic data improved.
Reuters
