European stock markets gain on company earnings – Italian vote is eyed

<p>European stock markets gained on Tuesday as investors tentatively bought into shares after pleasing earnings from Vodafone and Marks and Spencer’s, though gains remained fragile […]</p>

European stock markets gained on Tuesday as investors tentatively bought into shares after pleasing earnings from Vodafone and Marks and Spencer’s, though gains remained fragile as investors eyed an important vote in the Italian Parliament on the 2010 budget review.

The positive company earnings today is helping to entice investors into the market who would otherwise have been tunnel visioned to the vote in the Italian Parliament today. We can however expect high trader sensitivity and prices knee jerk reactions to any rumour or speculation out of Rome on the likelihood of a victory today for Mr Berlusconi or the potential for him to resign. As such, an inordinate amount of investors may do well to keep an eye on his Facebook profile page today.

The vote is expected to take place just after lunch London time and so there is every chance that the result of the vote will play a role in how European stock markets close on the day. The FTSE 100 gained 1% within the first hour of trading this morning, with similar gains seen for the DAX and CAC indices with the energy behind today’s early gains being spread evenly between heavyweight oil, mining and banking sectors.

Vodafone shares rally 2% as update delights shareholders
Shares in Vodafone rallied 2% in early trading, with shareholders bulled by telecom giant lifting its full-year profit outlook and hiking its interim dividend. The firm saw strong growth in emerging markets and string trading in northern Europe, helping to counter weakness in Southern Europe where price cuts in Spain, where unemployment rages, pressurised profit margins. Any update from a company that nets shareholders an increase in dividend and upgrades their profit outlook was also likely to be received very well by investors. The fact that it’s the telecom giant Vodafone doing it, helps to lift broader sentiment somewhat.

Marks and Spencer’s reports earnings slightly ahead of median expectations
Marks and Spencer’s shares rallied 3.8% after the retailer reported earnings that fell slightly ahead of the median of investor expectations. The firm reported to shareholders a profit before tax of £315.2 million, leading Oriel Securities to repeat a ‘buy’ rating on the stock saying that ‘despite unseasonably warm weather, M&S has delivered a strong performance in the second quarter during which like-for-like sales in general merchandise fell by just 2.5% against tough competition.’

Lloyds Banking Group tops FTSE leader board
Shares in Lloyds Banking Group however were the leading stock on the FTSE 100 despite the 40% state-owned bank reporting a third quarter loss of £607 million and saying that it may miss some of its financial targets. However, the bank maintained its full-year guidance on margins and reduction for losses on its bad loans and this has helped to counter some of the negative news from the loss leading headlines.

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