European Shares Spurred On by Earnings and Macro Data

Investors set aside growth worries as European shares clawed back the previous session's losses on Thursday, buoyed by earnings from European companies and better macro economic data in China and the United States.


The FTSEurofirst 300 Index provisionally closed up 13.05 points, or 1.2 percent, at 1,109.43, having fallen 0.6 percent on Wednesday.

Telecoms and financials were among the top gainers after results from BT Group , Lloyds Banking Group nd Legal & General lifted sentiment in their respective sectors.

Lloyds reported an underlying loss that was better than last year and highlighted bad debts that were not as bad as expected.

Telecoms rose 1.4 percent with BT Group accounting for much of that gain as the UK-listed telecoms firm climbed 7 percent on relief that cost cutting measures helped the company protect its earnings outlook.

BSkyB posted strong first-quarter earnings on Thursday; shares closed over 7 percent higher.

Some 56 percent of European companies have so far beaten or met expectations in the current quarter, although earnings estimates for the fourth quarter have been cut by an average 1.2 percent on those companies that have reported, according to Thomson Reuters Starmine data, reflecting some outlook concerns.

"Based on the very recent evidence market valuations can absorb a little bit of a tick down in earnings estimations. Maybe the market is ahead of the analysts on this one," Paul Kavanagh, market strategist at Killik & Co, said.

Volumes improved and equities were given a further lift after data in the U.S. pointed to a slow healing in the labor market, while manufacturing picked up modestly in October.

That followed data overnight showing big Asian economies were slowly picking up after a year spent battling against global headwinds. China's October official Purchasing Managers Index (PMI) rose to 50.2 in October from 49.8 in September, almost matching a forecast for 50.3.

However, political uncertainty within the European Union continued. It emerged late on Wednesday that France and the U.K. are threatening to stymie a deal on the EU's long-term budget after divisions surfaced over cuts and contributions.

France is opposed to the loss of farming subsidies and the U.K. parliament voted against a freeze of EU budgetary spending on Wednesday. Lawmakers wanted deeper cuts in the U.K.'s contribution to the European Union.

Greece's ASE Composite Index closed lower, with investors concerned the country's latest austerity bill may not pass through parliament at next week's vote.