Eurostocks Extend Gains on Ifo, Deutsche Telekom Shines
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Monday May 27, 5:00 am Eastern Time
Reuters Business Report
Eurostocks Extend Gains on Ifo, D.Telekom Shines
By Alison Tudor
LONDON (Reuters) - European shares extended their gains in morning trade Monday as a stronger-than-expected German Ifo business climate survey fueled flagging hopes of a rebound in corporate earnings.
The world's biggest reinsurer Munich Re rose amid optimism over its imminent results and Deutsche Telekom got a boost from an article in influential financial magazine Barron's.
"There is some short covering by hedge funds today in the technology and telecom sectors as some stocks are becoming good value," said Robert Kerr, European equity strategist at Bank of America Securities.
At 0811 GMT the FTSE Eurotop 300 index of pan-European blue chips was 0.48 percent firmer while the narrower DJ Euro Stoxx 50 index tacked on 0.93 percent.
Germany's influential Ifo index climbed in May, beating expectations and signaling renewed confidence that Europe's economy is on the mend.
However, volumes were thin with Wall Street closed for the U.S. Memorial day holiday and newsflow slowed to a trickle in Europe. Most strategists believe the outlook for equities remains bleak.
"Corporate fundamentals have not improved while political tensions are rising, so now is not the time to be buying aggressively," said Gert de Mesure, head of equity strategy at Delta Lloyd Securities in Antwerp.
DEUTSCHE TELEKOM SHINES
Heavily indebted German telecoms group Deutsche Telekom was 2.8 percent firmer, helped by an article in the May 27 issue of Barron's which said Deutsche Telekom shares might be a bargain for patient investors.
Europe's largest mobile phone group Vodafone was 0.88 percent higher ahead of its full-year results Tuesday.
France Telecom added 1.56 percent ahead of its shareholder meeting, also scheduled for Tuesday.
The world's biggest reinsurer Munich Re rose one percent ahead of its quarterly results. The group is expected to report a rise in first quarter premium income while pre-tax and net figures will be inflated by billions of euros from the tax-free sale of shares. The results are due around 0830 GMT.
French retailer Carrefour rose 2.6 percent after Deutsche Bank upgraded the stock to "buy" from "market perform," targeting 60 euros for the shares on expectations of earnings growth.
On the downside, Italian carmaker Fiat was 2.5 percent weaker. Banks warned Fiat over a possible downgrade to junk status and urged additional asset sales including insurer Toro, seen as worth about three billion euros, plus aeronautics company FiatAvio, worth about two billion euros, newspapers reported.
Three top bank creditors of Fiat, Banca di Roma, IntesaBci and Sanpaolo IMI, met Saturday in Rome to discuss the loss-making company's financial troubles. |
