* FTSEurofirst up 1.2 percent
* BT soothes outlook worries
* Lloyds gains as bad debts fall
* BofA ML upgrade boosts Richemont and luxury goods stocks
* Asia, U.S. data helps sentiment
By David Brett
LONDON, Nov 1 (Reuters) - Investors set aside growth worries
as European shares clawed back the previous session's losses on
Thursday, buoyed by corporate earnings and better macro
economic data in China and the United States.
The FTSEurofirst closed up 13.61 points, or 1.2
percent, at 1,109.99, having fallen 0.6 percent on Wednesday.
Telecoms and financials were among the top
gainers after results from BT Group, Lloyds Banking Group
and Legal & General lifted sentiment in their
Telecoms rose 1.4 percent with BT Group accounting for much
of that gain as the UK-listed telecoms firm climbed 7 percent on
relief that cost cutting measures helped the company protect its
Some 56 percent of European companies have so far beaten or
met expectations in the current quarter, although earnings
estimates for the fourth quarter have been cut by an average 1.2
percent on those companies that have reported, according to
Thomson Reuters Starmine data, reflecting some outlook concerns.
"Based on the very recent evidence market valuations can
absorb a little bit of a tick down in earnings estimations.
Maybe the market is ahead of the analysts on this one," Paul
Kavanagh, market strategist at Killik & Co, said.
European shares trade on a 12-month forward
price-to-earnings (PE) ratio of 11.5 times, below their 10-year
average of around 13.5 times, according to Thomson Reuters data.
Lloyds Banking Group, which trades on a PE of 11
times, rallied 8.3 percent as progress in the bank's recovery
plan overshadowed the increased cost of correcting past
The UK lender posted a drop in third-quarter bad debts,
although it took another 1 billion pound ($1.6 billion) hit to
compensate customers mis-sold loan insurance.
Pay-TV group BSkyB added 0.7 percent and Royal Dutch
Shell rose 2.5 percent after their respective results.
UK insurer Legal & General gained 4.5 percent after its
sales rose 6 percent to 1.42 billion pounds in the
third-quarter, beating expectations.
Revenue beats have not matched earnings in Europe so far
with 49 percent companines missing revenue expectations, and
analysts have revised forecasts down by an average 1.5 percent
for the fourth-quarter.
Concerns over revenues has seen the luxury goods sector come
under pressure of late following downbeat reporting from LVMH
But the sector recovered all its recent losses on Thursday
with Richemont, up 4.9 percent, leading the revival as
BofA Merrill Lynch upgraded the watchmaker to "buy" from
The investment bank said Richemont remains one of the
fastest growing companies in its peer group due to above average
exposure to Asia and room for margin improvement.
Luxury goods firms also got a boost after data
overnight showed big Asian economies were slowly picking up
after a year spent battling against global headwinds.
There was some good data in the U.S. too which pointed to a
slow healing in the labor market, while manufacturing picked up
modestly in October, which lifted sentiment ahead of non farm
payrolls due out on Friday.
The pick-up in activity, particularly in China, increased
appetite for European Automakers with BMW up
The sector has been under pressure from waning demand in
Europe, which sees no sign of abating with a downturn in UK
manufacturing highlighting recovery risks.
Worries over the broader global economy has kept the
FTSEurofirst within a tight 40 point range since early September
when central banks acted to prevent the financial system from
Analsysts at Shore Capital recommended investors "sell"
equities, worries that a Eurozone depression maybe accompanied
by a U.S. recession in the first-half 2013.
Investors continue to punish those companies that disappoint
with their earnings with heavyweight energy firm BG Group
falling 4 percent and adding to previous session's losses as
analysts continue to cut forecasts after results.