A clutch of positive results from across the financial sector nudged European equities higher on Thursday, pushing the main indices back towards recent nine-month highs as the European Central Bank said it would keep its main interest rate at 1 per cent.
The pan-European FTSE Eurofirst 300 index rose 0.4 per cent to 938.56. The French CAC 40 edged up 0.5 per cent to 3,477.83, while in Germany the Xetra Dax climbed 0.3 per cent to 5,369.98.
KBC, the largest Belgian lender by market value, helped lift the sector after posting an unexpected profit for the second quarter. Underlying net profit was €409m.
The bank, which had previously posted three-consecutive quarterly losses, benefited from a sharp improvement in the price of corporate credit, which boosted the value of its collateralised debt obligations.
Analysts at Sal Oppenheim said in a note: “In line with other banks, KBC positively surprised in trading income and booked high loan-loss provisions.
“Compared to market estimates, underlying as well as reported net profit was above expectations. The future outlook for KBC looks rather challenging.”
Shares in KBC surged 20 per cent during the session to reach €19.65.
Belgian sector rival Fortis also experienced a strong session, adding 5.7 per cent to €2.95
Zurich Financial one of the world’s leading insurance groups, rose 2.2 per cent at SFr220.80 after the Swiss group posted a better-than-expected net profit in spite of a more challenging market.
“The group remains confident that it is not only well positioned to weather the current financial market crisis but to take advantage of opportunities both currently and once a more stable economic environment returns,” the insurer said in a statement.
In France Natixis gave one of the best performances as it rose 16.3 per cent to €2.26, and Société Générale reached a new high for the year, climbing 4.1 per cent to €51.14. Switzerland’s UBS gained 2.6 per cent to SFr15.89.
Commerzbank, fell 1.3 per cent to €5.82 after revealing more losses following its takeover of fellow German lender Dresdner Bank
Deutsche Börse, the German stock and derivatives market operator, lost 1.9 per cent to €51.93 after Morgan Stanley sold 3.5m shares in the company.
The shares were offered at €50 to €51 each, an e-mail sent to Morgan Stanley’s clients showed.
On Tuesday Deutsche Börse reported a worse-than-expected 34 per cent drop in second-quarter operating profit.
Oil and gas stocks were mixed. France’s Total and Spain’s Repsol climbed slightly higher, while Norway’s StatoilHydro continued to lose ground, down 0.42 per cent to NKr131.29, on the back of a poor session on Wednesday.
OMV was one of the worst performers. The Austrian energy group lost 6.3 per cent to €26.07 after it was cut from “neutral” to “sell” by UBS.
“OMV is viewed as an oil price play but is no longer as geared to the oil price given its hedged volumes. There is the risk it overpays for Petrol Ofisi and again stretches its balance sheet, and there is further downside risk to our refining forecasts,” said UBS.
Air France continued to make gains after a strong session on Wednesday, adding 3.4 per cent to €10.34, while German airline rival Lufthansa rose 3.6 per cent to €10.57.
Iberia, Spain’s largest carrier, put on 2.8 per cent to reach €1.68 at the close.
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