Unilever, Man Group strength boosts European stocks
LONDON: European shares edged higher on Thursday as strong results from Unilever lifted bluechip consumers staples stocks and helped offset weakness in the energy sector.
The pan-European STOXX 600 index was up 0.3 percent by 0730GMT. The UK’s FTSE 100 was down 0.1 percent.
Banks were the top sectoral gainers for a second consecutive session, up 0.6 percent. UBS on Wednesday upgraded European banks to ‘neutral’ from ‘underweight’, citing rising reflation expectations and a seemingly more benign regulatory environment.
Unilever helped drive UK and European benchmarks, after the consumer sector bellwether posted a first-quarter sales beat, helped by price increases.
The gains by Unilever, which earlier this year rejected a hostile takeover bid by US firm Kraft Heinz, supported the personal and household goods sector which rose up 0.4 percent.
“Margins are where it really counts for Unilever as it tries to shore up its defences against another bidder who can promise higher margins and better return on equity,” said ETX Capital analyst Neil Wilson.
“Unilever is aiming at an underlying operating margin of 20 percent by 2020, underpinned by growth in emerging markets. The first quarter update suggests it’s on track but risks remain.”
Nestle shares rose 0.7 percent after it maintained a modest 2-4 percent growth target for underlying sales, slightly less than Unilever’s.
Shares in Spanish infrastructure company Abertis rose 3.3 percent, among top European gainers, as the market weighed Italian peer Atlantia’s plan to take over the company.
Deutsche Bank downgraded both stocks from buy to hold. “We believe the market could apply a risk discount to Atlantia on the possibility of a take-over bid premium,” said analysts at the bank.
Atlantia shares were down 1 percent.
Energy sector stocks were in the red, reeling from a sharp slide in oil prices overnight. Lundin Petroleum and Tullow Oil were among the top fallers in the sector .
In another sign of a better backdrop for the asset management industry, British hedge fund Man Group shares rose 2.9 percent after it reported net inflows over the first quarter.
“This is a very strong start to the year that is likely to lead to consensus upgrades,” said Liberum analysts.
Earlier this week peer fund manager Ashmore posted net inflows for the first time in nearly three years, and on Wednesday Henderson posted first quarter results, showing assets were cushioned by market gains in the period.
Pandora was up 5.6 percent, regaining ground after a broker downgrade hit it earlier in the week. The company updated its financial reporting structure, confirming its 2017 outlook.
Swedish packaging firm Billerudkorsnas gained 4.3 percent after it posted first-quarter profits in line with forecasts, saying it expected strong demand in the current quarter.
Construction equipment rental company Ashtead fell 3.7 percent after its US peer United Rentals’ results disappointed.
France’s CAC 40 outperformed peers, rising 0.6 percent with banks BNP Paribas and Societe Generale among top gainers, up 2.9 and 1.9 percent respectively.—Reuters
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