European shares ride global equity wave, ECB policy meeting eyed

* STOXX 600 up 0.3 pct

* Banking sector awaits ECB to hint on policy shift

* Nordea falls after Q2 undershoots expectations

* EasyJet, Lufthansa lead travel and leisure sector down

By Julien Ponthus and Helen Reid

LONDON, July 20 (Reuters) – European shares extended their
gains in early deals on Thursday, lifted by buoyant global
markets, hours ahead of European Central Bank meeting that
investors expect will lay the groundwork for an autumn policy
shift.

The pan-European STOXX 600 rose 0.3 percent after
major U.S. and Asian stock indexes closed at record highs,
helped notably by technology stocks which finally surpassed
their dotcom bubble peaks.

The sector continued to shine in Europe with a 0.6
percent rise following its best daily performance since
September during Wednesday’s session.

SAP, Europe’s most valuable technology firm,
reversed early gains to fall 0.2 percent after reporting
revenues for the second quarter rose 10.4 percent to 5.78
billion euros, slightly above analysts’ expectations.

The European banking sector retreated by 0.3 pct
ahead of the ECB’s policy meeting, at which light could be shed
on how it intends to progressively exit its stimulus package.

Nordea, the Nordic region’s biggest bank by market
value, reported second-quarter operating earnings below analyst
estimates and dropped 5.6 percent. In the same region, Danske
Bank retreated 1.7 percent after posting its
quarterly earnings.

Although few expect a clear statement on policy change,
investors were eager for any hints as to how and when the
European central bank intends to progressively put an end to
its massive asset purchases.

“We think that (…) the ECB is now focused on carefully
preparing the markets for a tapering decision on 7 September,”
UBS analysts said in a research note.

Britta Weidenbach, head of European equities at Deutsche
Asset Management said : “As long as these developments on the
interest rate front go along with a very good economic backdrop,
that should not be a problem for equity markets — rather the
opposite, it should be positive.”

With a 2.4 percent jump, France’s Publicis, was
the best performer in the media sector after the
advertising group announced underlying sales grew by 0.8 percent
in the second-quarter.

Anglo-Dutch conglomerate Unilever, whose products
range from Hellmann’s mayonnaise to Dove soap, edged 0.6 percent
higher after reporting slightly weaker than expected quarterly
sales but reaffirmed it was sticking to its full-year target.

Among stocks trading in negative territory was Swiss
engineering company ABB, which was down 2.6 percent
after a weaker-than-expected increase in quarterly net profit.

British budget airline easyJet along with Germany’s
Lufthansa led the travel and leisure sector
down with a 4.1 percent fall.

(Reporting by Julien Ponthus; Editing by Catherine Evans)


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