By Amanda Cooper
LONDON, Jan 14 (Reuters) - Technology stocks fuelled the
first gains in four trading days in European shares on Monday,
led by Nokia <NOK1V.HE> and Germany's SAP <SAPG.DE> after
positive results from some industry heavyweights.
Banks were the top performing sector as investor
expectations mounted for more growth-promoting rate cuts from
the world's major central banks.
The FTSEurofirst 300 index <> of top European shares
ended 0.23 percent higher at 1,432.14. The index shed nearly 2
percent last week as concern over more subprime-related losses
at the banks and a slowdown in consumer spending hit global
equities.
Nokia was the top-weighted gainer on the broader market,
rising 1.3 percent, while software firm SAP rose 2.7 percent and
chipmaker ASML <ASML.AS> gained 3.1 percent.
"If you look at the broader picture, we've finally managed
some sort of pullback after the steep losses we saw at the
beginning of the year, so it's also logical that tech, which was
very much hammered, is rebounding a bit," said Philippe Gijsels,
senior equity strategist at Fortis Bank, in Brussels.
"What the markets really want and won't get in the short
term is some confidence from the companies ... earnings season
has started and we've already had a number of warnings and what
people want is a sort of timing as to when they will end."
IBM <IBM.N>, the world's largest technology services
company, and LG Philips LCD <034220.KS>, the world's
second-biggest maker of liquid crystal display panels posted
strong results, helping push European tech shares up by 2
percent <.SX8P>.
Monday's modest gain in the broader European market was the
first in four trading days, but the index still held close to
its lowest since December 2006.
NAGGING CONCERN
The FTSEurofirst has lost about 5 percent this year, hit by
worries over the prospect of a U.S. recession, after rising 1.6
percent in 2007, its worst annual performance since 2002.
"We reduce Continental Europe to underweight from
benchmark," Andrew Garthwaite, global equity strategist at
Credit Suisse, said in a note.
"Our concerns are that: monetary conditions are abnormally
tight and we are worried that the ECB will be slower to react
than any other central bank; European GDP growth is re-coupling
with the U.S. and from here we see more downside to European
lead indicators than those in the U.S."
Credit Suisse also said Europe was more vulnerable than any
other major region to the credit squeeze given its very high
reliance on wholesale funding.
Banking shares were supported by a report of potential
additional capital injections into the sector, which has been
hit by worries over company exposure to the crisis in the U.S.
subprime lending market.
Royal Bank of Scotland <RBS.L> was up 1.7 percent, Barclays
<BARC.L> rose 3.2 percent higher and UBS <UBSN.VX> gained 1.1
percent.
Among major decliners was French utility Suez <LYOE.PA>,
which fell 1.1 percent after Credit Agricole <CAGR.PA> said it
would sell a 2.07 percent stake in the firm, worth a potential
1.25 billion euros ($1.85 billion). Gaz de France, which is
merging with Suez, was down 1.6 percent.
This weighed on other companies within the European
utilities sector. German rivals E.ON <EONG.DE> and RWE <RWEG.DE>
fell between 2 and 3 percent.
On the U.S. earnings front, investors are awaiting results
this week from Citigroup <C.N>, which could take a writedown of
as much as $24 billion and cut between 17,000 and 24,000 jobs,
CBNC said on Monday.
Intel <INTC.O>, JPMorgan <JPM.N>, Merrill Lynch <MER.N> and
General Electric <GE.N> also report this week.
The Financial Times said Merrill was seeking about $4
billion in a second capital raising and the Kuwait Investment
Authority is expected to be a significant investor in this deal.
The paper also reported Citigroup was putting the final
touches on a second big fundraising, seeking up to $14 billion
from Chinese, Kuwaiti and other investors.
Both Germany's DAX index <> and Britain's FTSE 100
index <> gained 0.2 percent and France's CAC 40 <>
rose 0.6 percent.
Shares in Deutsche Boerse <DB1Gn.DE> rose nearly 3 percent,
making them one of the top German performers, buoyed by upgrades
from several analysts after its announcement on Friday of
measures to reduce its tax rate and thereby boost earnings.
(Additional reporting by Anshuman Daga in London and Blaise
Robinson in Paris; Editing by Quentin Bryar)
