November 14, 2013 9:30 am

Earnings lift European equity markets

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Well-received earnings from France’s Bouygues and the UK’s Prudential set the pace on Europe’s equities markets and led a broad rally that excluded only the utilities sector following a weak outlook from Germany’s RWE.

Bouygues, the construction and telecoms conglomerate, gained 5.7 per cent to €29.30 and was top performer on a resurgent FTSE Eurofirst 300. The gains came as investors got their first chance to react to the company’s forecast-beating third-quarter earnings, released after the close of trade on Wednesday.

Prudential was also a notable gainer, up 2.7 per cent at £12.77, after it reported a 5 per cent increase in third-quarter sales and a 14 per cent jump in so-called new business profit – the present value of expected future earnings from sales during the period.

Overall, the FTSE Eurofirst 300 is up 0.8 per cent at 1,294.14.

The utilities sector failed to join the rally, however, after Germany’s RWE – the power generator suffering from a steep drop in wholesale power prices and a green energy boom that has driven its conventional power plants into loss – said it expected 2014 results to be “significantly lower” than the outlook it set this year and that it would boost cost-saving measures.

Europe’s main equities indices made broad gains, after risk appetite on global markets was sharpened by comments from the incoming chairman of the US Federal Reserve.

Janet Yellen’s prepared testimony, due to be delivered to a Senate committee later on Thursday, sounds dovish, talking of high unemployment. It was seen as a signal that monetary policy will remain loose.

The FTSE 100 was up 0.9 per cent at 6,687.64, while the CAC 40 in Paris added 1.1 per cent at 4,286.03 and the Xetra Dax 30 in Frankfurt was 0.9 per cent higher at 9,132.90.

There were some dramatic moves among London mid-cap stocks, with an 8.4 per cent fall to 461.5p for shares in Serco after it reduced guidance. The outsourcing company, which has been hit by an investigation into one of its contracts with the UK government, lowered expectations on 2013 profits, while also warning that 2014 earnings would be “moderately lower” than this year.

Shares in Perform Group, the FTSE 250 sports media company, were 15.7 per cent weaker at 462.1p. The company said earnings before interest, taxation, depreciation and amortisation would fall by £4m for the full year after contracts expected for its technology and production unit were not signed.

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