By Peter Starck
FRANKFURT, April 28 (Reuters) - European shares rose for a
fourth straight session on Monday to hit a two-month closing
high, propelled by financials on hopes writedowns will soon be
left behind and miners on the back of higher metal prices.
The FTSEurofirst 300 index <> of top European shares
advanced 0.6 percent to 1,338.60 points, its highest finish
since Feb. 27.
Shares in Swiss UBS <UBSN.VX>, the European bank hit hardest
by writedowns linked to risky U.S. debt securities, rose 3.2
percent and rival Credit Suisse <CSGN.VX> put on 2.7 percent.
Bear Stearns raised its rating on Credit Suisse to "peer
perform" from "underperform", saying in a note: "We believe the
measures taken by Credit Suisse have cleaned up the balance
sheet and will stabilise the situation. In addition, the Private
Banking businesses are holding up well in difficult conditions."
JPMorgan, in a note on European wholesale and investment
banks, cut its estimate of additional mark-to-market writedowns
to 6.8 billion euros ($10.7 billion) pretax in 2008 from 8.3
billion.
"The worst of the markdowns seems to be over," JPMorgan
said."In listed continental Europe we see no additional capital
raising requirements based on current mark-to-market analysis."
The DJ Stoxx bank European index <.SX7P> gained 1 percent.
It has risen 18 percent since a mid-March low, outperforming the
top-300 index, which has gained 11.6 percent in the same period.
Strategists, however, remained cautious.
"The huge outperformance of European equities versus U.S.
equities since early 2003 will at least partly reverse this
year," Societe Generale said in a note, noting the MSCI Europe
index had gained 173 percent in dollar terms in the past five
years compared with a rise of 75 percent for the MSCI U.S.
index.
A Cazenove note said profit estimates remained too high in
both the United States and Europe, despite downward revisions,
and expected further downgrades for full-year 2008.
At AXA Investment Managers, strategist Franz Wenzel said:
"We think this is still a bear market rally and remain convinced
that U.S. earnings will take a hit later this year ... The
macroeconomic data is still weakening, there's no signs of
stabilisation and we expect another leg down in the summer."
NERVES OF STEEL
Strategists at NordLB, another German bank, forecast that
the DJ EuroStoxx 50 index <> of euro zone blue chips
would fall 7 percent to 3,550 points on a three-month horizon
and remain below current levels also six months from now.
On Monday, rising gold <XAU=>, silver <XAG=> and copper
<MCU3> prices lifted mining stocks, with Kazakhmys <KAZ.L> up
3.7 percent, Antofagasta <ANTO.L> 2.6 percent higher and Xstrata
<XTA.L> adding 2.2 percent.
Analysts at Credit Suisse raised their 2008 copper price
forecast to $4 per pound from a previous $3.60.
"If strike action accelerates in Chile, then prices could
easily spike above ... $12,000 per tonne ($5.50 per pound),"
said Credit Suisse, reiterating its "outperform" rating on
Xtrata <XTA.L>, which earns 45 percent of its profits from
copper.
Elsewhere, Whitbread shares <WTB.L> rose 3.1 percent after
the owner of Britain's biggest hotel and coffee-shop chains
reported a rise in annual pretax profit and said the start of
this financial year had been encouraging.
"Given the recent poor share price performance, we believe
the results will be greeted with relief, especially as the
outlook statement is positive, which should be good news in the
context of a slowing UK consumer," Citigroup said in a note.
In focus on Tuesday will be quarterly earnings from Deutsche
Bank <DBKGn.DE>, energy heavyweights BP <BP.L> and Royal Dutch
Shell <RDSa.L> as well a carmakers Daimler <DAIGn.DE> and BMW
<BMWG.DE>.
Later in the week, attention moves to the U.S. Federal
Reserve, due to announce a rate decision on Wednesday.
A majority of economists forecast a 25 basis-point cut by
the Fed, but there is still a chance of no cut, based on fed
funds futures.
(Additional reporting by Blaise Robinson in Paris with
Sitaraman Shankar and Dominic Lau in London; Editing by David
Holmes)
