* FTSEurofirst 300 index up 0.4 pct
* Banks, commods rise
* Ryanair slips as reduces FY profit
By Joanne Frearson
LONDON, July 27 (Reuters) - European shares were higher in
early trade on Monday, resuming their sharp two-week rally on
corporate results optimism with banks and commodity stocks the
biggest risers.
By 0826 GMT, the FTSEurofirst 300 <> index of top
European shares was up 0.4 percent at 910.69 points. The
pan-European index ended a shade lower on Friday after rising
for nine straight sessions, a rally fuelled by
better-than-expected company results.
The index, which surged more than 11 percent over the past
two weeks, has gained 41 percent since reaching a lifetime low
in early March.
"Corporate results this week will again be crucial. Although
the figures appear better or quite optimistic for some people,
what I am concerned about is sales figures are not so good,"
said Justin Urquhart Stewart, direct at Seven Investments.
"Companies are only just stripping out the bark... what you
have got is a squeeze in demand... I think we need to be rather
careful on how much further this rally goes in the Western
markets," he said.
Banks were among the biggest movers on the index with Banco
Santander <SAN.MC>, Societe Generale <SOGN.PA>, Deutsche Bank
<DBKGn.DE> and UniCredit <CRDI.MI> up 1-2.6 percent.
Energy stocks were higher as crude <CLc1> rose towards $69 a
barrel. BP <BP.L>, Royal Dutch Shell <RDSa.L> and Total
<TOTF.PA> were up 0.7-1.8 percent.
Mining stocks gained as copper <MCU3=LX> ticked up 1.7
percent. Anglo American <AAL.L>, Antofagasta <ANTO.L>, BHP
Billiton <BLT.L>, Eurasian Natural Resources Corporation
<ENRC.L>, Rio Tinto <RIO.L> and Xstrata <XTA.L> were 1.4-2.4
percent higher.
British publishing group Pearson <PSON.L> soared 10 percent
after the publishing group reported above-forecast first-half
results and maintained its full-year outlook. []
RYANAIR SLIPS
On the downside, Irish airline Ryanair <RYA.I> slumped 10.5
percent after the company said it would reduce its full-year
profit outlook to the lower end of 200-300 million euros.
[]
"The downgrade, in terms of profits, spooked the market,"
one Dublin-based trader said.
"People generally didn't believe him (Ryanair's chief
executive) at the full-year stage when he was guiding yields
down 15-20 percent and now that he is guiding them down further
than that, guys are getting a bit scared."
Within the sector, British Airways <BAY.L> lost 2.9 percent
and easyJet <EZJ.L> eased 2.1 percent.
Europe's largest defence electronics company Thales
<TCFP.PA> slipped 3.3 percent after it posted a deeper than
expected slide in first-half profit, hampered by the weak
economy and delays in a major European military project.
[]
Volkswagen <VOWG.DE> was down 3.8 percent after the
Financial Times Deutschland reported that the carmaker is
considering a 4 billion euros capital increase to offset the
credit rating impact of its merger with Porsche <PSHG_p.DE>.
A Volkswagen spokeswoman declined to comment on the report.
Porsche fell 5.2 percent.
Across Europe, the FTSE 100 <> index was up 0.04
percent, Germany's DAX <> was 0.6 percent higher and
France's CAC 40 <> was up 0.6 percent.
Turning to economic news, June U.S. new homes sales numbers
will be the main macro focus, with the consensus forecast for a
rise of 0.36 million, up from 0.342 million in May.
(Editing by Mike Nesbit)
