* FTSEurofirst 300 up 0.9 pct, Euro STOXX 50 up 1.4 pct
* Investors shrug off jump in Spain’s borrowing costs
* ECB seen resisting calls to revive bond buying programme
* Half of Euro STOXX 50 below book value-Valquant’s Galiegue
By Blaise Robinson
PARIS, May 3 (Reuters) – European stocks rose early on
Thursday after results from companies such as Societe Generale
and France Telecom reassured investors who
shrugged off a sharp rise in Spain’s borrowing costs at a bond
auction.
Trading was choppy, however, as traders awaited the outcome
from the European Central Bank policy meeting, with the bank
seen keeping interest rates on hold at 1 percent and resisting
calls to restart its bond-buying programme to ease pressure on
Spanish debt.
At 1100 GMT, the FTSEurofirst 300 index of top
European shares was up 0.9 percent at 1,053.33 points, capped by
strong resistance at the 38.2 percent Fibonacci retracement of
the slide from mid-March to late April.
The ECB has put its bond buying programme on hold for
several weeks despite a rise in Spanish yields to
6 percent. A move above that, to 7 percent, is considered an
unsustainable price to pay for refinancing the country’s debt.
“Clearly, the hurdle to overcome is the (German) Bundesbank,
which remains keen to fulfill its role as the euro zone’s fiscal
policeman now that question marks are being raised over France’s
commitment to cost cutting as (Socialist candidate Francois)
Hollande inches closer to an election win on Sunday,” Saxo Bank
macro strategist Mads Koefoed said.
The euro zone’s blue-chip Euro STOXX 50 index
was up 1.4 percent at 2,324.90 points.
“Half of the Euro STOXX 50 stocks trade below their book
value, which seems quite excessive to me, but the pull-back
might not be over yet and it’s like catching a falling knife,”
said Eric Galiegue, head of Valquant, a Paris-based financial
research firm.
Shares in Societe Generale were up 0.8 percent after a
surprise surge in the French bank’s trading revenues from its
bond, currency and commodity desks helped soothe the effect of a
series of one-off charges.
Other banks gained ground, with French investment bank
Natixis up 2.1 percent, Spain’s Bankinter up
2.2 percent and Italian lender Intesa SanPaolo up 2.4
percent.
Spain’s borrowing costs jumped at an auction of three- and
five-year bonds on Thursday, though the sale met strong demand,
signalling investors have not yet lost their appetite for the
country’s debt.
The sale was the first since Standard and Poor’s cut Spain’s
credit rating by two notches to BBB+ last week and followed data
showing the economy has slipped into its second recession since
late 2009.
Around Europe, the UK’s FTSE 100 index was up 0.6
percent, Germany’s DAX index was 1.2 percent higher,
and France’s CAC 40 was up 1.3 percent.
France Telecom added 2.9 percent after the telecom
major said a revamped offering had helped limit the damage
caused by the launch of a low-cost mobile competitor in January.
Telecom Italia was up 3.7 percent and Telefonica
up 2.4 percent.
