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Earnings support European shares but oil slump weighs

Published 05/07/2017, 18:20
Updated 05/07/2017, 18:30
© Reuters. The Milan's stock exchange building is seen during the opening of the initial public offering of the Poste Italiane in downtown Milan
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By Danilo Masoni

MILAN (Reuters) - European shares rose on Wednesday at the end of a volatile session with gains among consumer stocks, led by Adidas (DE:ADSGn) on optimism over its upcoming earnings.

A renewed slide in oil prices kept a lid on the increase, with the pan-European STOXX 600 (STOXX) index ending up 0.2 percent while the euro zone blue chip index (STOXX50E) closed flat.

The top gainer on the STOXX was CHR Hansen (CO:CHRH) after the food ingredients maker beat third-quarter profit forecasts and raised its revenue growth guidance.

Adidas was the second biggest, up 4.9 percent as brokers sounded upbeat ahead of the sporting goods group's earnings release next month.

While DZ Bank added the stock to its long list expecting strong numbers in Western Europe and China, HSBC said Adidas was likely to increase its outlook, upgrading it to "buy".

"We believe the sales growth story and associated margin expansion plan make this stock a very visible compounder," HSBC analysts said in a note.

In London, housebuilder Persimmon (L:PSN) jumped 2.4 percent after it reported a 7 percent rise in first-half sales.

Oil prices retreated 3 percent, ending their longest bull run in more than five years as rising OPEC exports and a stronger dollar turned sentiment more bearish.

That hurt energy stocks (SXEP), the biggest sectoral faller in Europe this year, which fell 1.4 percent, wiping most points off the STOXX index.

Miners (SXPP), which also find support when oil prices rise, ended up 0.2 percent, paring earlier gains that were helped by a Credit Suisse (SIX:CSGN) sector upgrade to "overweight".

Top faller in Europe was Worldpay (L:WPG), down 8.8 percent after U.S. credit card processor Vantiv (N:VNTV) agreed to buy the British payment company for 7.7 billion pounds.

In the previous session the stock soared nearly 30 percent after news of rival approaches from Vantiv and JPMorgan (N:JPM), which said on Wednesday it did not plan to make a counter bid.

Interest rate-sensitive utilities (SX6P) were another weak spot, down 0.7 percent.

© Reuters. The Milan's stock exchange building is seen during the opening of the initial public offering of the Poste Italiane in downtown Milan

A rise in interest rates has been a focus for markets since central banks hinted at a possible tightening in monetary policy, with higher bond yields making high dividend-paying stocks like utilities less attractive.

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