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European stocks were steady in early trading on Thursday, taking a breather from a sharp two-month rally, with Allianz falling after its dividend rise disappointed.
Shares in Europe’s largest insurer fell 2.6 per cent, the biggest losers among blue-chips, as it raised its dividend by less than expected and results in asset management stalled following client defections at its US unit Pimco.
Greek banking shares fell, dragged by renewed worries over the country’s ability to make debt repayments to the IMF and the European Central Bank this year.
Shares in National Bank of Greece, Alpha Bank, Bank of Piraeus and Eurobank were down 2.9-4.7 per cent.
Belgian chemicals group Solvay rose 3.7 per cent after saying it would pay out more to its shareholders following better-than-expected results.
About two thirds into Europe’s earnings season, 55 per cent companies have met or beaten profit forecasts. Overall, fourth-quarter earnings are expected to grow by 19.5 per cent, according to Thomson Reuters I/B/E/S, which would be Europe’s best season in 3-1/2 years.
At 0902 GMT, the FTSEurofirst 300 index of top European shares was up 0.1 per cent at 1,543.47 points, taking a breather from its two-month rally during which it has gained 13 per cent, boosted by the upcoming bond-buying programme by the European Central Bank, which has also pushed bond yield down.
Germany’s 7-year bond yields turned negative for the first time on Thursday, dipping around 2 basis points to hit a trough of -0.003 per cent, while 10-year yields were 2 bps lower at 0.304 per cent, just off a record low of 0.298 per cent hit last month.
“The massive liquidity on the market has been pushing the yields down,’’ Saxo Bank trader Andrea Tueni said.
“The fact that the yields are turning negative is not a signal of risk aversion. The stock market is very bullish, although indexes in Europe are ‘overbought’ at this point.’’
Around Europe, UK’s FTSE 100 index was up 0.03 per cent, Germany’s DAX index flat, and France’s CAC 40 up 0.01 per cent.
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