By Amanda Cooper
LONDON, Feb 21 (Reuters) - European shares rose early on
Thursday, buoyed by Nestle <NESN.VX> results and as an investor
flight to stocks swept global equities higher, while no negative
surprises on the earnings front helped banks.
Nestle shares were the top gainers on the broader European
market, rising 4 percent after the world's largest food company
defied record prices for ingredients such as milk and cocoa and
posted a 15.8 percent leap in 2007 net profit.
Food and beverage stocks <.SX3P> topped the European
sectoral indexes led by Nestle, and by SABMiller <SAB.L> after
the brewer said it would not bid for British rival Scottish &
Newcastle (S&N) <SCTN.L>. SAB Miller shares were up 1.7 percent,
while S&N shed 2.5 percent.
Global equities rallied, aided by a turnaround on Wall
Street the day before when the Federal Reserve cut its growth
forecasts, suggesting room for further rate cuts.
Banks rose, helped by the prospect of falling U.S. interest
rates and after no further negative surprises in quarterly
results from scandal-ridden Societe Generale <SOGN.PA>.
By 0915 GMT, the FTSEurofirst 300 index <> of top
European shares was up 0.9 percent to 1,332.6 points, having
fallen by more than 1 percent the day before. Advancing issues
outnumbered decliners by seven to one.
"For the first time in four months the Fed is talking about
growth and simply said if growth is going to resume, then it
will have to lift base rates in order to combat inflation
pressures," said Heino Ruland, a strategist at FrankfurtFinanz.
"Therefore the speculation is that we are facing a growth
recession as opposed to a fully fledged recession ... and we'll
be over it sooner rather than later."
NO SHOCK IN SOCGEN
Among the financials, Socgen shares gained 1.7 percent after
France's second-biggest listed bank posted a record
fourth-quarter loss in line with its forecast after earnings
were hit by its previously announced $7 billion trading loss.
"Taking a slightly longer-term view, management is insisting
that the rogue trader losses are a one-off, that the business
model is intact, and that there is good growth for the business
in central and Eastern Europe, notably Russia," said Bear
Stearns in a note.
German insurer Allianz fell 0.2 percent after net profit
dropped by more than half in the fourth quarter, as strength in
its main property-casualty insurance business could not offset
the damage from subprime writedowns at its banking arm.
Among the financials, Royal Bank of Scotland <RBS.L>, BNP
Paribas <BNPP.PA> and Deutsche Bank <DBKGn.DE> were up between
1.3 and 1.7 percent.
Deutsche Postbank <DPBGn.DE> shares rose 2 percent after a
German media report said Allianz was interested in bidding for
the company. Allianz declined to comment.
Oil and gas producers also rallied, in line with crude oil
futures <CLc1> nudging the $100 a barrel mark. France's Total
<TOTF.PA> and Royal Dutch Shell <RDSa.AS> were up about 1
percent, while BP <BP.L> was flat.
Vodafone <VOD.L> was among top weighted gainers, rising 1.9
percent to pare some of Wednesday's 4.6 percent fall.
Dutch navigation device maker TomTom <TOM2.AS> shed nearly 9
percent, ranking it among the largest percentage decliners after
analysts said the company's 2008 outlook was conservative.
TomTom roughly doubled its device sales in the fourth
quarter and its gross margin fell less than expected even as it
expanded its share of the competitive U.S. market.
"They seem to be more conservative than (U.S. rival) Garmin
<GRMN.O> was yesterday for the total market," Rabo Securities
analyst Frits de Vries said.
"The main question is really whether they will be able to
maintain the gross margin above the 40-percent level."
More than double the full daily average volume seen in the
last 30 days for TomTom had already changed hands by 0905 GMT.
Technology stocks were mixed in Europe even after an upbeat
outlook from U.S. firm Hewlett-Packard <HPQ.N> and a rise in
shares of U.S. mobile phone chipmaker Qualcomm <QCOM.O>
Nokia <NOK1V.HE> shares were up 1.1 percent, while
Alcatel-Lucent <ALUA.PA> was up 1.7 percent and Logitech
<LOGN.VX> was down 0.8 percent.
BASF <BASF.DE> shares were up about 0.7 percent after the
chemicals company reported a 5.6 percent fall in operating
profit, while net profit rose 8.3 percent.
(Additional reporting by Niclas Mika in Amsterdam; Reporting by
Amanda Cooper; Editing by Paul Bolding)
