* FTSEurofirst 300 index up 0.1 percent
* Construction shares among top gainers
* Technicals signal some weakness
By Atul Prakash
LONDON, April 27 (Reuters) – European shares inched higher
in morning trade on Friday, helped by encouraging company
earnings and a march higher for construction and material stocks
led by a rise in 2012 sales targets for French firm Vinci
.
Sandvik jumped 10 percent, with volumes hitting
143 percent of its 90-day daily average, after the Swedish
machinery and tool maker posted record orders and a surprise
rise in quarterly earnings, on the back of strong demand in its
industrial tools and mining business.
The FTSEurofirst 300 index of top European shares
was up 0.1 percent at 1,045.09 points at 0850 GMT after falling
to a low of 1,034.54 earlier in the session following a
two-notch cut in Spain’s credit rating overnight.
The STOXX Europe 600 Construction and Materials index
rose 1.3 percent, boosted by a 4.1 percent rise in
Vinci.
France’s largest construction and concessions company lifted
its 2012 sales target after first-quarter revenue rose 6 percent
on strong orders outside Europe and brisk construction business.
But the euro zone’s blue chip Euro STOXX 50 index
was still down 0.3 percent to 2,314.71 points. Its
technical chart showed that the index could face further
pressure.
“We are in an overriding consolidation phase and given the
weakness of countries like Spain and Italy and the composition
of the Euro STOXX 50, I see the relative weakness of this index
for quite some time,” Petra von Kerssenbrock, analyst at
Commerzbank, said.
She said the index hovered in a trading range and a
resistance was seen near its 200-day moving average at around
2,350. The index could find support at around 2,238 – a low on
April 23. Below that, it has a massive support near 2,200 – a
December low.
CAUTION PREVAILS
Investors remained cautious after Standard & Poor’s cut its
rating on Spain by two notches late on Thursday, reminding
investors that the region’s debt woes will continue to scare
markets.
The credit agency, citing expectations Spain’s finances will
deteriorate even more than thought due to the recession and the
country’s ailing banking sector, downgraded the country to
BBB-plus from A and put a negative outlook on the
credit.
“This downgrade shows that governments in Europe are still
struggling to get their budget in balance. We are probably going
to see more downgrades from other rating agencies,” Philippe
Gijsels, head of research at BNP Paribas Fortis Global Markets
in Brussels, said.
“You will continue to see this consolidation phase for some
more time as the newsflow is likely to be predominantly
negative. Investors should stay on the defensive side such as
utilities in the current environment.”
Banks, many of which are heavily exposed to many
deb-laden European countries, fell 0.1 percent. Norway’s DNB
fell 8.8 percent after missing first-quarter profit
expectations due to a big one-off financial charge and warned
meeting its full-year target would be “challenging”.
Among other sharp movers, Ireland-based building materials
group CRH rose 2.8 percent and volumes were 113 percent
of its 90-day daily average in less than two hours of trading,
as JPMorgan lifted its rating for the firm to “overweight”,
citing valuation and scope for upside earnings surprises.
