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Gains at Carrefour help lift European stock markets

Source : REUTERS
Last Updated: Sat, Jan 19, 2013 06:22 hrs

* FTSEurofirst 300 up 0.2 pct, Euro STOXX 50 gains 0.4 pct

* Carrefour surges 8.1 pct after Q4 sales figures

* Defensive stocks outperform

* Rio Tinto slumps after $14 bln writedown

By Sudip Kar-Gupta

LONDON, Jan 17 (Reuters) - European shares edged higher on Thursday as gains at French supermarket retailer Carrefour offset losses at miner Rio Tinto after Rio announced a $14 billion hit.

However, some traders forecast little headway for equities in the near term as investors adopt a cautious approach due to worries that results from the region's top companies may show the strains of the weak global economic backdrop.

The FTSEurofirst 300 index was up by 0.2 percent at 1,161.93 points by around midday, while the euro zone's blue-chip Euro STOXX 50 index gained 0.4 percent to 2,713.39 points.

"For me, the overall picture is still pretty positive," said MB Capital trading director Marcus Bullus.

The share prices of companies seen as "defensive" plays in an uncertain market environment, such as retailers and healthcare groups which tend to have steady profit growth even in a weak economy, outperformed on Thursday.

Carrefour rose 8.1 percent after reporting fourth-quarter sales figures, while Associated British Foods also gained 7.3 percent after reporting higher sales.

"We prefer defensive sectors such as food and beverages, personal household goods and healthcare and will remain on the defensive side, at least during the earnings season," said Unicredit equity strategist Christian Stocker.

RIO WRITEDOWN

However, a slump at miner Rio Tinto prevented European equities from making bigger gains.

Rio Tinto took the most points off the FTSEurofirst 300 as it fell nearly 2 percent after announcing the $14 billion hit and the resignation of its chief executive.

"There's one or two jitters around," said XBZ Ltd European equity options broker Mike Turner.

"We're taking some stabs at the upside but without any real conviction. One of the reasons is maybe because of anticipation of in-line or weaker-than-in-line corporate results," he added.

Some traders said more signs of strong corporate earnings from Europe's top companies were needed before European equity markets could gain more ground.

"There's been a mixed bag on the earnings front so far. In the short-term, we're in the bear camp," said Darren Easton, director of trading at London-based Logic Investments.



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