Tech boosts European sharesComment on this story
London - European shares rose on Tuesday, led by tech stocks as estimate-topping results from chipmaker Infineon and telecommunication gear maker Nokia brightened the outlook for the sector.
Infineon and Nokia were among the top risers on the pan-European FTSEurofirst 300 index after they reported quarterly earnings boosted respectively by demand from automotive and industrial customers and by software deals.
The STOXX Europe 600 Tech index was up 1.7 percent, a top sectoral riser.
Telecom equipment maker Alcatel Lucent, for example, added 2.8 percent.
While demand drivers vary between different companies, Nokia and Infineon's strong numbers helped improve sentiment around the sector as a whole, which had been dented by weak updates from ASML, Ericsson and SAP earlier this month.
Exposure to industrial demand helped Infineon in comparison to the likes of SAP, Frederique Carrier, director of European Equities at RBC Wealth Management, said. She said it was too early in the earnings season to get overly optimistic.
“It's early in the earnings season, but while there are some companies that are beating expectations, the numbers which have come out are quite mixed,” she said.
“There's little evidence yet of an earnings rebound, and earnings are again overall being revised downwards for the fourth consecutive year.”
About 22 percent of companies listed on the STOXX Europe 600 index reported quarterly results through April 28, with 55 percent having beaten or met analysts' expectations, according to Thomson Reuters StarMine.
But analysts have downgraded their full-year estimates for 2014 earnings by nearly 3 percent in the last 30 days.
Over the previous week, tech shares' earnings forecasts for the next 12 months had been cut by 0.8 percent, the steepest pace of downgrade of all sectors and nearly three times the market average at 0.3 percent.
Upbeat results by heavyweights such as Norwegian oil & gas group Statoil and Germany's largest lender Deutsche Bank also boosted the broader market.
They more than outweighed a 6.8 percent drop in Swiss engineering group ABB, which posted an unexpected fall in first-quarter profit due to weak power system orders, while Swedish hygiene and paper products maker SCA fell 2.2 percent after earnings rose slightly less than expected.
The pan-European FTSEurofirst 300 index, was 1.1 percent higher at 1,351.09 points.
The euro zone Euro STOXX 50 was up 130.9 percent at 3,208 points.
European indexes have struggled to make much headway since hitting multi-year highs earlier this month but charts on the Euro STOXX 50 showed the index was likely to surge after this lull, according to Philippe Delabarre, a technical analyst at Trading Central.
He highlighted a symmetrical triangle on the index, a pattern formed by two converging lines which connect a series of sequentially lower peaks and higher troughs.
Once the price breaches one of these lines, a sharp movement often follows.
“We still believe the symmetrical triangle, a bullish continuation pattern, is the main pattern to trade,” Delabarre said.
“Therefore, as long as the triangle's basis at 2,970 is a support threshold, our target is 3,440, corresponding to the overlap between the March 2008 low and August 2008 high.” - Reuters