Earnings lift European shares for fourth day

European shares rose for the fourth consecutive day yesterday as generally positive earnings reports lifted sentiment, although automaker Daimler took a beating after scrapping its dividend.

Swiss engineering group ABB soared 7.6 per cent after fourth-quarter results, while Capgemini, Europe's largest computer consultancy, rose 6.2 per cent after reporting profits above forecasts.

The FTSEurofirst 300 index of leading European shares closed 0.7 per cent higher at 1,021.66 points, hitting a two-week closing high for the second day and after gaining 2.8 per cent in the previous three sessions, despite the continuing sovereign debt crisis in Greece.

"The threat in Greece will be resolved one way or another," said Nick Nelson, European equity strategist at UBS in London.

"We think the earnings cycle is obviously recovering strongly, so ultimately over a six-month or 12-month view the market will look at the earnings; that's what drives the market."

Stronger US forward economic indicators, including factory activity in the mid-Atlantic region and the Conference Board survey, countered a rise in the number of US workers filing new applications for unemployment insurance last week.

Among other companies that were boosted by earnings, French company Schneider Electric added 3.9 per cent and BAE Systems, Europe's biggest military contractor, advanced 4.3 per cent.

Swiss Re rose 2.8 per cent after the insurer swung to a 2009 net profit and strengthened its capital position.

Across Europe, Britain's FTSE 100 advanced 0.9 per cent, and both Germany's DAX and France's CAC 40 added 0.6 per cent."There's been some good bottom-up newsflow. If you look at the earnings, at the margins, they've been pretty good," said Georgina Taylor, equity strategist at Legal & General Investment Management.

"People have put the macro headlines to one side. There's a bit of macro fatigue in the market. Investors took risk rapidly off the table early in the year so there's room for a bit of a short-term bounce," she said.

Carmakers fell, however, with Daimler shedding 4.7 per cent after saying it would skip a dividend for 2009 results after it posted a €1.51 billion loss before interest and tax.

Within the auto sector, both BMW and Porsche lost 0.7 per cent. French bank Société Générale dropped 7.2 per cent as traders expressed disappointment with its fourth-quarter figures, though Europe's banking sector edged 0.1 per cent higher.

Barclays and BNP Paribas rose two and 2.2 per cent, extending this week's gains after their results.

Dutch chemical group AkzoNobel slumped nearly 7.5 per cent after it reported a worse-than-expected four per cent rise in fourth-quarter operating profit.