European shares edge higher as Scotland-exposed firms gain

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(Update 2: Thurs 11/09/14 19:10:39)

LONDON (Sept 11): European shares edged higher on Thursday, with Scottish-exposed companies such as Standard Life, SSE and Royal Bank of Scotland rallying after a poll suggested voters in Scotland would reject independence in next week's referendum.

The survey late on Wednesday by Survation for the Daily Record newspaper showed 53 percent support for retaining the three-centuries-old union with England, with 47 percent favouring a breakaway from the United Kingdom. The results excluded the 10 percent of respondents who were undecided.

Scotland-based Lloyds gained 1.3 percent, while RBS rose 1.4 percent. Standard Life and SSE were up 1.8 percent and 1.5 percent respectively.

Lloyds said on Wednesday its contingency plans for Scottish independence included setting up "legal entities in England", while government and banking sources said RBS would also base itself in London in the event of independence.

"The latest poll is relatively reassuring but it's still quite close. Whatever the result of the vote though, the implication for Europe is that it revives the spectre of similar referendums in Spain's Catalonia and Belgium's Flanders," said Alexandre Baradez, chief market analyst at IG France.

"It's a risk that investors have to start pricing in."

At 1021 GMT, the FTSEurofirst 300 index of top European shares was up 0.2 percent at 1,388.72 points, bouncing from a recent slide on increased political uncertainty in the United Kingdom.

Analysts said the broader European stock market would struggle to make strong gains in the near term as recent disappointing European economic numbers may be reflected in company earnings.

"Delivered economic numbers are really missing expectations in Europe which could weigh on shares as economists remain overly optimistic. The upcoming earnings season is crucial to determine if the recent earnings growth has some momentum," Coutts global equity strategist James Butterfill said.

"We have an overweight stance on European equities in the longer term because on a valuation basis it remains more attractive relative to the U.S.. The more positive policy stance from the ECB is also likely to support prices."

Butterfill said he still liked the energy sector despite recent declines in crude oil prices as the companies were attractively valued and remained a good income play.

The STOXX Europe 600 Oil and Gas index was flat, with BG Group rising 0.6 percent and Royal Dutch Shell falling 0.6 percent.

Data showed China's consumer inflation cooled more than expected in August, further evidence that the economy is losing momentum, but economists are divided over whether Beijing will use the extra room to announce new stimulus measures.

Despite the day's gains, the FTSEurofirst 300 is still down about 1 percent from a peak hit last Thursday.

"It's a dead cat bounce," TradingSat analyst Alexandre Tixier said. "The volumes since the low hit yesterday during the session are very thin, it's not a good sign. I think the recent pull-back will soon resume and there will be better entry points."

Europe bourses in 2014:
Asset performance in 2014: