* FTSEurofirst 300 up 0.6 pct, Euro STOXX 50 up 0.9 pct
* Traders jockey ahead of ECB meeting; volumes low
* Beiersdorf rises 4.4 pct, BNP Paribas boosts banks
* Veolia slides 9 pct after its results disappoint
By Sudip Kar-Gupta
LONDON, Aug 2 (Reuters) – European shares rose on Thursday,
buoyed by banking sector gains in a volatile trading session as
investors tried to assess the likelihood of concrete policy
action from the European Central Bank.
Trading volumes were below average as many investors held
off from taking up new positions ahead of the outcome of
Thursday’s ECB meeting, taking place after the bank’s president
pledged to do whatever it takes to save the euro.
French bank BNP Paribas led gains among lenders
after reporting a smaller-than-expected drop in profits, while
German cosmetics group Beiersdorf also rose,
offsetting a slump in utility Veolia.
The FTSEurofirst 300 index rose 0.6 percent to
1,074.41 points, while the Euro STOXX 50 index rose
0.8 percent to 2,350.27 points, Volumes on the FTSEurofirst were
at just 24 percent of their 90-day average.
The STOXX European banking index rose 0.9 percent,
with BNP up 2.3 percent.
Beiersdorf, which makes Nivea skin care products, topped the
FTSEurofirst 300’s leaderboard with a 4.8 percent gain after the
company increased its outlook for 2012 profits.
Michel Juvet, chief investment officer at Swiss bank
Bordier, said he has an “overweight” position on European
equities, partly because he felt the ECB would take new steps to
tackle the euro zone crisis, such as restarting its purchases of
European government bonds.
“Valuations are cheapest among European equities. There are
a lot of expectations on the ECB, and at the very least they
should reopen their bond-buying programme,” said Juvet.
VEOLIA SINKS
French utility Veolia was the worst performer on the
FTSEurofirst 300, slumping by 9 percent after reporting results
that missed forecasts.
Bank of America Merrill-Lynch cut its rating on the stock to
“neutral”, saying that estimates for Veolia’s 2012 results could
also be reduced.
Some traders were sceptical over what might emerge from the
ECB meeting, due to persistent signs of disagreement among
policymakers over how to deal with the spreading debt crisis.
Expectations that the ECB may announce steps to lower
sovereign borrowing costs for Spain and Italy have been tempered
by Germany’s opposition to exceptional policy measures. That
would include giving the euro zone’s future ESM rescue fund a
full banking licence, which that would let it borrow from the
ECB to fund government bond purchases.
“They’ve got to announce resuming their bond purchases. But
we need to see more decisive action over how they’re going to
resolve some of the longer-term issues. We still favour selling
into the rally,” said Darren Easton, director of trading at
London-based Logic Investments.
