* FTSEurofirst 300 up 0.5 pct, hit fresh 29-mth closing high
* SocGen gains on robust earnings; banks up 15.6 pct YTD
* For up-to-the-minute market news, click on []
By Dominic Lau
LONDON, Feb 16 (Reuters) - European shares rose to a
29-month closing high for the third successive day on Wednesday,
driven by strong results from French bank Societe Generale
<SOGN.PA> and brewer Heineken <HEIN.AS>.
Societe Generale advanced 4.9 percent, while the European
banking sector <.SX7P> put on 2.4 percent to extend its gains
for the year to 15.6 percent.
The sector carries a 12-month forward price-to-earnings of
9.3 times versus the benchmark STOXX Europe 600's <> 11.1,
Thomson Reuters Datastream showed, though banks are expected to
post a 30 percent increase in earnings this year, compared with
a 15 percent average rise for firms in the STOXX Europe 600.
Heineken, the world's third-largest brewer, also beat market
forecasts with its 2010 results. Its stock rose 3.1 percent.
The pan-European FTSEurofirst 300 <> closed 0.5
percent at 1,186.13 points, while the DAX <> rose 0.2
percent but the German index may be ripe for a pull back, with
the relative strength index reaching 75.3, which is considered
overbought.
"With so much money sloshing around the world at the moment,
anyone who is bearish is being squeezed up," a trader said.
Data from Thomson Reuters StarMine showed 66 percent of 116
European companies that have reported fourth-quarter earnings
have either beaten or met revenue forecasts.
However, 54 percent of them missed earnings expectations.
German carmaker Daimler's <DAIGn.DE> results were the latest
to come in below market forecasts. []
Its announcement of a bigger-than-expected dividend payout
for 2010 and an upbeat outlook for this year failed to reassure
investors, who sent Daimler shares down 4.4 percent.
Across Europe, Britain's FTSE 100 <> added 0.8 percent
though it is only up 3.1 percent so far this year,
underperforming a 5.7-percent rise in the FTSEurofirst 300 and a
7.2 percent gain in the DAX.
A Bank of England report on inflation outlook was seen as
broadly supportive of equity markets. []
"The economic backdrop is pretty supportive... Inflation on
a medium-term (outlook) is not a panacea for equities. It would
tend to drive money out of bonds and equities would probably
benefit from fund flow effect," said Ronan Carr, equity
strategist at Morgan Stanley.
However, if inflation was to accelerate further, it could be
a headwind for equities and the second half of the year could be
tricky for stocks, he said.
M&A NEWS
Apart from earnings, corporate activity has also been
supportive to general market sentiment.
French drugmaker Sanofi-Aventis <SASY.PA> advanced 3.5
percent after announcing its deal to buy Genzyme Corp <GENZ.O>
with a sweetened $20.1 billion cash offer. []
Cepsa <CEP.MC> soared nearly 23 percent after Abu Dhabi
bought half the Spanish oil company from French group Total
<TOTF.PA> for $5 billion. []
The deal raised speculation that Total would use the Cepsa
proceeds to take control of Spanish rival Repsol <REP.MC> by
buying a 20 percent stake from Spanish builder Sacyr <SVO.MC>.
Total dismissed the talk, sending Sacyr shares down 6.6 percent.
Clariant <CLN.VX> shed more than 13 percent after the
chemicals maker said it would buy Germany's Sued-Chemie
<SUCG.DE>. Traders said it had paid too much. []
The U.S. Federal Reserve will release the minutes of its
rate-setting meeting in January later in the day, which may give
further insight about its stand on the economy and inflation.
U.S. core producer prices in January rose at their highest
rate in more than two years. []
Nevertheless, investors have been upbeat about the market,
with UBS saying retail investment flows into equities hit the
highest level in seven years, while net buying was also seen
from hedge funds, long-only funds and corporates.
[]
(Editing by Mike Nesbit)
