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 European shares bucked a softer trend in Asian and U.S. markets as a
sharp overnight pullback in crude oil prices dampened risk appetite
there. Brent crude was up 1.24 percent by 0420 ET on Friday.
The FTSEurofirst 300 index <.FTEU3> index of top European shares was
up 0.3 percent at 1,561.60 points, with strong annual results from
Airbus Group <AIR.PA>, the world's second-largest aerospace company,
spurring the rally.
About two-thirds of the way into Europe's earnings season, 55
percent of companies have met or beaten profit forecasts. Overall,
fourth-quarter earnings are expected to grow by 19.5 percent,
according to Thomson Reuters I/B/E/S, which would be Europe's best
season in 3-1/2 years. "The rally in stocks is so strong that we
could see a capitulation of the shorts at some point, which would
push the market even higher. Clearly some indexes have reached
frothy valuation levels, but we're still long in the short term,"
said Mirabaud Securities senior equity sales trader John Plassard in
Geneva.
The FTSEurofirst 300 index is up 14 percent so far this year as the
prospect of the ECB's quantitative easing program drove core
European bond yields into or close to negative territory pushing
investors into higher-yielding assets such as equities.
Euro zone inflation data for February due at 1300 is expected to
underline the ECB's Jan. 22 decision to embark on a 60 billion euro
monthly securities buying program to fend off deflation and revive
the euro zone economy.
European government bond yields held near record lows before the
data expected to show consumer prices fell 0.5 percent in February.
"Stimulus seems to be working a treat for some of the key markets
around the world, including Japan and the euro zone. Recent data out
of Europe has also been showing some positive signs and this has
really encouraged investors to drive equities higher," Stan Shamu,
market strategist at IG in Melbourne.
Asian equities mostly retreated from multi-year highs after falls on
Wall Street overnight, with the MSCI's broadest index of
Asia-Pacific shares outside Japan down 0.1 percent after advancing
to a five-month high on Wednesday.
Strong factory output data and a weaker yen pushed Tokyo's Nikkei to
a fresh 15-year high but the market was last flat as profit taking
kicked in.
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U.S. HEALTH CHECK
The dollar index slipped, pegged back by month-end selling, but was
still on track for its eighth straight month of gains on better data
and comments from Federal Reserve officials that bolstered bets for
a rate rise this year.
The index, which measures the dollar's performance against major
currencies, was set to mark its longest streak of monthly gains
since the greenback was floated as a fiat currency in 1971.
"It is the data, especially core inflation and durable goods, that
is catching attention. We are still calling for a June rate hike and
the market is not pricing that. (The markets) are looking for a hike
much later. So yes, we think the dollar will outperform," said
Hamish Pepper, strategist at Barclays.
The dollar eased 0.1 percent against the yen to 119.30 yen, but
remained above Thursday's low of 118.68 yen.
Investors are now waiting for revised fourth quarter U.S. gross
domestic product data due later on Friday for another health check
of the world's largest economy.
Economists polled by Reuters expected U.S. growth in the fourth
quarter to be revised down to 2.1 percent from a preliminary 2.6
percent.
The slip in the dollar helped the euro to edge up 0.15 percent to
$1.1215, but still near the one-month low of $1.1184 plumbed
overnight.
(Additional reporting by Blaise Robinson in Paris and Anirban Nag in
London)
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