European shares edged higher on
Thursday as strong results from Unilever lifted bluechip
consumers staples stocks and helped offset weakness in the
energy sector.
The pan-European STOXX 600 index was up 0.3 percent
by 0730GMT. The UK's FTSE 100 was down 0.1 percent.
Banks were the top sectoral gainers for a second consecutive session, up 0.6 percent. UBS on Wednesday upgraded European banks to 'neutral' from 'underweight', citing rising reflation expectations and a seemingly more benign regulatory environment.
Unilever helped drive UK and European benchmarks, after the consumer sector bellwether posted a first-quarter sales beat, helped by price increases.
The gains by Unilever, which earlier this year rejected a hostile takeover bid by U.S. firm Kraft Heinz, supported the personal and household goods sector which rose up 0.4 percent.
"Margins are where it really counts for Unilever as it tries to shore up its defences against another bidder who can promise higher margins and better return on equity," said ETX Capital analyst Neil Wilson.
"Unilever is aiming at an underlying operating margin of 20 percent by 2020, underpinned by growth in emerging markets. The first quarter update suggests it's on track but risks remain."
Nestle shares rose 0.7 percent after it maintained a modest 2-4 percent growth target for underlying sales, slightly less than Unilever's.
Shares in Spanish infrastructure company Abertis rose 3.3 percent, among top European gainers, as the market weighed Italian peer Atlantia's plan to take over the company.
Deutsche Bank downgraded both stocks from buy to hold. "We believe the market could apply a risk discount to Atlantia on the possibility of a take-over bid premium," said analysts at the bank.
Banks were the top sectoral gainers for a second consecutive session, up 0.6 percent. UBS on Wednesday upgraded European banks to 'neutral' from 'underweight', citing rising reflation expectations and a seemingly more benign regulatory environment.
Unilever helped drive UK and European benchmarks, after the consumer sector bellwether posted a first-quarter sales beat, helped by price increases.
The gains by Unilever, which earlier this year rejected a hostile takeover bid by U.S. firm Kraft Heinz, supported the personal and household goods sector which rose up 0.4 percent.
"Margins are where it really counts for Unilever as it tries to shore up its defences against another bidder who can promise higher margins and better return on equity," said ETX Capital analyst Neil Wilson.
"Unilever is aiming at an underlying operating margin of 20 percent by 2020, underpinned by growth in emerging markets. The first quarter update suggests it's on track but risks remain."
Nestle shares rose 0.7 percent after it maintained a modest 2-4 percent growth target for underlying sales, slightly less than Unilever's.
Shares in Spanish infrastructure company Abertis rose 3.3 percent, among top European gainers, as the market weighed Italian peer Atlantia's plan to take over the company.
Deutsche Bank downgraded both stocks from buy to hold. "We believe the market could apply a risk discount to Atlantia on the possibility of a take-over bid premium," said analysts at the bank.
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