Company earnings beats take European shares to new 5-yr high

Last Updated: Tue, May 14, 2013 16:50 hrs

* FTSEurofirst 300 up 0.5 pct to fresh 5-yr closing high

* Euro STOXX 50, Germany's Dax also scale new closing peaks

* Intesa Sanpaolo, Deutsche Post, EADS gain on profit beats

By Francesco Canepa

LONDON, May 14 (Reuters) - European shares stretched to a new five-year closing high on Tuesday, helped by a batch of forecast-beating company results and renewed signs of appetite for stocks from cash-rich investors.

Italian bank Intesa Sanpaolo, German mail company Deutsche Post and French industrial conglomerate EADS were among top gainers after reporting better-than expected-profits, overshadowing some cautious operational numbers.

In a generally disappointing quarterly reporting season so far, European companies have performed better on earnings than on sales, with 48 percent of them meeting or beating consensus expectations on the former metric and 41 percent on the latter, Thomson Reuters data showed.

The divergence was even more marked in the United States, a key focus for investors across the globe, where 72 percent of companies have met or beaten consensus on earnings and only 28 percent on sales.

"The ability of the corporates to still beat expectations on earnings shows that there is resilience and cost control and is a reason for the momentum," said Lorne Baring, managing director at B Capital, who has long positions on German, French and U.S. stocks.

"Of course that (momentum) is backed by the non-stop quantitative easing from central banks."

His views were mirrored by influential U.S. investor David Alan Tepper, who said in a CNBC interview on Tuesday that he was still bullish on stocks in light of continued monetary stimulus from the U.S. Federal Reserve.

Tepper's comments, along with data forecasting an acceleration in U.S. chain stores sales in May, helped U.S. stocks rise and the pan-European FTSEurofirst 300 index end 0.5 percent higher at 1,236.62 points, a closing high not seen since mid-2008.

Germany's Dax rose 0.7 percent to 8,339.11 points, a new all-time closing high, while the euro zone Euro STOXX 50 added 0.7 percent to 2,795.63, a closing level not seen since July 2011.

Both indexes were roughly 0.2 percent and 0.3 percent off intra-day highs hit last week, respectively.

Charts showed a rally in European equity indexes had lost momentum since last Friday, with the Euro STOXX 50 dropping out of a rising wedge pattern started in April, leading some technical traders to bet on a pullback in the short term.

"I can't see the tops holding," Steve Ruffley, market strategist at spreadbetting provider InterTrader, said.

"I expect a downturn in the euro zone if the Euro STOXX 50 doesn't make a higher high on the daily chart and the Dax stalls."

He sees the Dax falling back to 7,882, a level roughly corresponding to the index's weekly high in the seven days to April 12, by the end of next week.

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