European equities clawed back some of the sharp losses of recent sessions on Tuesday after a number of positive corporate results eased concerns of an earnings slowdown.

Having shed 3½ per cent since the close on Thursday, the FTSE Eurofirst 300 climbed 0.7 per cent to 1,071.24. On Monday it suffered its biggest one-day fall for eight months.

Germany’s Xetra Dax underperformed the pan-European index, up just 0.1 per cent to 4,204.61, after the ZEW economic institute’s business expectations index dropped sharply in April.

Pharmaceutical stocks, which have provided shelter from the storm of the previous few sessions, proved to be winners again yesterday after Roche reported a 17 per cent rise in first-quarter sales.

The shares rose 2.5 per cent to SFr140.70 as strong performances from the Swiss drugmaker’s cancer treatments and flu drugs enabled it to raise its pharmaceutical division’s growth forecasts this year to double digits, as opposed to the 7-8 per cent previously targeted.

“We expect news flow to continue to be strong in the second quarter with the company’s oncology franchise likely to remain in the headlines,” said Michael Leacock, analyst at Nomura, which maintained a “buy” rating on the stock.

Credit Suisse First Boston was equally upbeat on the stock and maintained its “outperform” rating, while raising its target price to SFr150 from SFr138. “We believe the market may start to afford Roche a higher premium to the sector – particularly as the promise of growth in earnings that could exceed 20 per cent in 2006 as Avastin kicks in come into sight,” said Steve Plag.

BASF, the German chemicals and drugs group, gained 2.1 per cent to €52.09 after it announced it was to expand its share buyback programme by a further €1.5bn, following the completion of a €1bn share repurchase last month.

But Dutch chemicals and drugs group Akzo Nobel fell 0.3 per cent to €33.42 after reporting earnings in line with expectations. The company said rising raw materials costs had eaten into margins at its coatings unit, but was offset by a strong performance at its chemicals division. The company announced it had 5 drugs in, or entering, phase III clinical trials.

Other stocks in the sector also stood firm, with Sanofi-Aventis up 0.3 per cent to €67 and Novartis 2.3 per cent higher at SFr57.25.

Germany’s Altana however, shed 2.8 per cent to €51.30 on fears that sales of its potential blockbuster ulcer treatment pantoprazole would disappoint.

GPC Biotech of Germany rose 1.9 per cent to €8.63 as phase III trials of its Satraplatin prostate cancer drug suggested the company may be ready to file for US approval by the second half of next year. The company said it was to continue with trials.

TDC, the Danish telecoms group, was one of the few stocks to rise in Monday’s turbulent session on bid speculation. The company extended those gains by 2.7 per cent to DKr263.50 yesterday on reports that it could cost a buyer up to DKr85bn ($14.85bn) should a leveraged buyout be forthcoming.

“TDC is the most likely of the telecom companies to be considered as an LBO candidate,’’ Joshua Galaun, analyst at Dresdner Kleinwort Wasserstein,

Merrill Lynch, the investment bank, raised its rating on Germany’s Depfa Bank, which lends to local government. Merrill upgraded to “buy” from “neutral” after Depfa announced on Monday it was no longer planning the sale of its bond-issuing division Pfandbriefbank.

“The valuation of Depfa Bank has improved and with Monday’s announcement, the uncertainty over Pfandbriefbank has been removed,” Merrill said in a research note. The stock rose 3 per cent to €12.18.

Thales, the French defence electronics company, rose 2.3 per cent to €32.54 after announcing that Ross McInnes, chief financial officer and senior vice president, was to leave for Pinault-Printemps Redoute, where he will become head of finance. The company also reported a €236m government contract to supply 18 training simulators for the Tiger combat helicopter over the next 6 years.

After a few sessions in the doldrums oil and gas stocks moved higher as crude prices rose.

Spain’s Cepsa was the pick of the bunch, up 1.7 per cent to €30.60. Norsk Hydro and Statoil, the two Norwegian stocks, were up 1.2 per cent to NKr508 and 1.4 per cent to NKr108 respectively. Royal Dutch gained 1.2 per cent to €46.01.

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