×

UPDATE 1-European shares steady above 7-week low as tech and telecoms earnings impress

earnings impress@

* STOXX 600 steadies

* Infineon, Simcorp lead tech sector after strong earnings

* Altice sinks as Morgan Stanley slashes price target

* Telecoms peers Vodafone, Drillisch gain after results

* Pause in markets "not a big turning point" - BAML (ADVISORY- Follow European and UK stock markets in real time on the Reuters Live Markets blog on Eikon, see cpurl://apps.cp./cms/?pageId=livemarkets)

LONDON, Nov 14 (Reuters) - Encouraging earnings from telecoms and tech companies supported European shares on Tuesday, helping them steady above a seven-week low hit in the previous session.

The pan-European STOXX 600 erased earlier gains to trade flat, while telecom and tech sector strength helped German and French benchmarks gain 0.4 percent, and euro zone blue-chips rose 0.1 percent.

"Markets have moved quite a long way and a pause is probably warranted, but we don't think it's a big turning point," said Ronan Carr, European equity strategist at Bank of America Merrill-Lynch (BAML).

"Underlying fundamentals are still pretty constructive in terms of global growth, and we would be a buyer of any material dip in markets," he added.

Tech companies were the best-performing after stronger than expected results. Software maker Simcorp jumped 9.2 percent after earnings beat forecasts.

Internet services provider United Internet gained 1.8 percent after its acquisition of mobile firm Drillisch boosted its profits.

Peer Scout24 also jumped 4.8 percent.

Chipmaker Infineon gained 4.9 percent despite reporting weaker dollar-dented sales.

"While slightly disappointing, we continue to expect Infineon's margins to resume their upward trajectory," wrote Liberum analysts, saying the main headwind to sales and profitability was the stronger euro.

"Underlying growth trends in the tech sector are quite strong," said BAML's Carr. "Tech sector revisions momentum has not definitively bottomed out but it looks like it's finding a floor, much like the broader market."

Telecoms also delivered strong results.

German firm Drillisch rose 2.8 percent after it reported a 9.9 percent rise in nine-month revenues, and Britain's Vodafone gained 4 percent after upping forecasts for full-year earnings growth.

Altice bucked the sector trend, sinking 6 percent after Morgan Stanley cut its price target on the stock by 34 percent, adding to pressure on the shares which are already down 46 percent this year.

Stocks have had violent reactions to results this quarter, Goldman Sachs strategists said. Earnings-day price moves have been more than 3.5 times the average daily move the most extreme results reactions the bank had data for.

BAML's Carr said: "The penalty for misses is smaller this quarter, and the boost from beating is at the higher end of the range, but it's fairly benign. I would not agree that it's been extreme."

As the earnings season neared its end, MSCI euro zone companies were tracking 9.9 percent year-on-year earnings growth in U.S. dollar terms, and 62 percent of companies in the euro zone index had beaten or met earnings estimates.

Analysts had revised down earnings estimates for the broader MSCI Europe but downgrades seemed to have stabilized as the results season developed.

(Reporting by Helen Reid; Editing by Sujata Rao and Mark Potter)