European shares gained in early deals this morning, led up by good news on the earnings front from L’Oreal as investors looked to the new US Federal Reserve chair to reassure markets over policy.
L'Oreal's gained 2.5 per cent, the top FTSEurofirst 300 riser, after it said it would buy 8 per cent of its capital for €6.5 billion from Swiss consumer goods group Nestle, boosting the French cosmetics group's earnings per share by more than 5 per cent.
The French firm also saw underlying sales growth improve more than expected in the fourth quarter.
The pan-European FTSEurofirst 300 was up 0.4 per cent at 1,306.23 by 0806 GMT.
The broader market was supported along with other global equity markets by hopes that new Fed head Janet Yellen would strike a reassuring tone when she testified in front of Congress later in the day.
While she is not expected to signal any deviation from the “tapering” of equity-friendly asset purchases, she may indicate that the Fed’s forward guidance of low rates needs tweaking, given that the unemployment rate is near the central bank’s target well before the Fed is inclined to raise rates again.
"The rapid decline in the unemployment rate now sees it hovering just above the Fed's target level... However, the main reason for this has been people dropping out of the labour force," Jonathan Sudaria, trader at London Capital, said in a note.
Reuters
