By Peter Starck
FRANKFURT, April 24 (Reuters) - European shares rose on
Thursday as gains for bank Credit Suisse <CSGN.VX> and drugmaker
Novartis <NOVN.VX> outweighed losses for mining companies, which
fell on worries about slower economic growth.
Stronger than expected quarterly earnings from engineering
group ABB <ABBN.VX> and chemical and pharmaceutical maker Bayer
<BAYG.DE> also helped underpin European stock markets.
The FTSEurofirst 300 <> index of top European shares
closed 0.2 percent higher at 1,315.78 points, having fallen as
much as 1.3 percent earlier in the session.
Europe's benchmark index recovered in late trade, tracking a
bounce in U.S. financial stocks which saw Wall Street's leading
indexes <> <.SPX> <> switch into positive territory
despite weaker than expected U.S. new home sales data.
Equity market performance across Europe was mixed, with
Britain's FTSE 100 <> down 0.5 percent and the French CAC
40 <> 0.3 percent lower while Germany's DAX <> rose
0.4 percent and the Swiss SMI <> jumped 1.9 percent.
Credit Suisse rose 4.2 percent despite booking a further 5.3
billion francs ($5.18 billion) in credit-linked writedowns.
"Credit Suisse succeeded to reduce the risk exposures
significantly throughout the first quarter of 2008 which reduces
the capital at risk in coming quarters," Sal. Oppenheim said in
a research note.
Dresdner Kleinwort said Credit Suisse's tier-1 capital ratio
of 9.8 percent "may relax those concerned about a capital
increase."
The DJ Stoxx European banks index <.SX7P> rose 0.6 percent,
held back by, among others, Royal Bank of Scotland (RBS)
<RBS.L>, which fell 1.2 percent having announced earlier in the
week a $12 billion rights issue.
Societe Generale started RBS with a "sell" rating and a
target price of 255 pence.
Health care <.SXDP> was the day's top sectoral performer in
Europe with a gain of 1.2 percent. Novartis advanced 2.9 percent
to 51.70 Swiss francs, buoyed by a JPMorgan price target
increase to 63 francs.
Bayer rose 3.1 percent after reporting first-quarter profits
above market expectations. "Bayer delivered strong results in a
challenging environment," said Equinet, which rates Bayer "buy".
DIVERGING OUTLOOKS
ABB shares climbed 6.5 percent to their highest level since
early January after first-quarter net profit nearly doubled.
"It is clear that pricing in core businesses remains very
robust and we expect margins performance to show further
momentum," Bear Stearns said in a note on ABB's results.
On the downside, shares in the world's largest dental
implant maker Nobel Biocare <NOBN.VX> lost 11.2 percent after
the group posted a 25-percent drop in first-quarter net profit
and gave a more pessimistic outlook.
"That's a confession that digs deep holes in the share
price, especially as the market outlook has been cut back and
margins are eroding," analysts at bank Wegelin said in a note.
Mining shares, by far the best performing sector so far this
year, were hit by profit-taking. Rio Tinto <RIO.L> fell 4.2
percent, BHP Billiton <BLT.L> lost 4.1 percent and Anglo
American <AAL.L> dropped 2.9 percent.
Worries about economic growth and lower copper, gold and
platinum prices weighed on the sector, pushing the DJ Stoxx
European basic resources index <.SXPP> 2.2 percent lower.
"The (U.S.) growth backdrop continues to deteriorate ... the
investment outlook also continues to weaken as corporate profits
come under downward pressure and tighter credit conditions
restrict access to credit," Dutch bank ING said in note.
Data out on Thursday showed that sales of new single-family
U.S. homes fell 8.5 percent in March and the median sales prices
versus a year ago dropped by the largest amount since 1970.
In Germany, Europe's largest economy, the closely watched
Ifo business climate index fell more than expected in April.
"The gloomier expectations expressed are the main pointer to
the economy losing additional momentum," Commerzbank said.
"The significant fall in manufacturing sentiment highlights
that German companies are not immune against a stronger currency
and moderating global demand," said Citigroup.
But based on past performance, JPMorgan saw scope for a
recovery in European stock markets.
"The market is implying that the next week's Fed move will
be the final one in this cutting cycle," it said, referring to
an expected cut in the U.S. Federal Reserve's key interest rate.
"Looking at the six-month European equity performance after
the end of Fed cuts, stocks moved higher 6 out of 7 times, by
9.8 percent on average. Over the three-month period, stocks also
moved higher 6 out of 7 times, by 5.2 percent on average."
(Additional reporting by Blaise Robinson in Paris and Amanda
Cooper in London; Editing by Paul Bolding)
