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European equity markets are seeing a second day of gains today as a series of positive corporate results keeps sentiment buoyant. Benchmark indices extended the move in line with U.S. futures, after a number of positive earnings releases from American majors this morning.
Gains were muted earlier in the session, however, following a Spanish debt auction that saw relatively weak demand push the 10-year yield through the key 7% threshold, reminding investors that the situation in Europe is still far from over. The German DAX (INDEX: ^GDAXI ) is one of the best-performing indices on the continent, up 0.8%
Troubled phone maker Nokia (NYSE: NOK ) has been making some of the most significant gains today, up almost 15% after it announced surprisingly better-than-expected sales of its Lumia handset. Sales of the smartphone rose from 2 million to 4 million in the second quarter; much higher than analyst estimates and leading to the end of the shares' slide this week.
The company, however, did report that second-quarter net loss widened from 368 million euros to 1.48 billion euros, while revenue fell 19% to 7.5 billion euros. At the same time, total smartphone sales dropped 39% to 10.2 million units, although Nokia did report more net cash than expected at 4.2 billion euros.
Elsewhere, carmakers are generally firmer today after EU regulators brought forward a proposal to start free-trade talks with Japan, aimed at expanding economic ties with the country. Specifically, the European Commission presented its proposal on the removal of trade barriers, such as tariffs, suggesting that liberalization is the cheapest way to help stimulate the economy.
If the proposals do become enacted, the automotive and technology sectors are among just a few that should benefit. Today Peugeot (OTC: PEUGY) is leading the sector, helped further after the company's CFO suggested President Hollande's message that the proposed job cuts at the company were "unacceptable," is not as severe as first thought. Peugeot is up 6.6%.
On the other side of the market, Finnish utility Fortum (OTC: FOJCY) has plummeted 7.3% after it reported second-quarter net income at 188 million euros, compared to estimates of 240 million euros, and said that it sees challenges in the coming months. CEO Tapio Kuula did suggest that the company's income stream is heavily weighted toward the end of the year, though.
Elsewhere, Telecom Italia (NYSE: TI ) has dropped over 5% after the European Commission said in a formal letter of notice today that the country's limits on the powers of its telecommunications agency may violate EU rules. This specifically refers to an Italian law that separates the provision of access to the company's wholesale network from the activation and maintenance of lines, and if found guilty could make the country subject to fines.
As always, this morning's European news saw some winners and losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying the stock of a prominent European large cap.
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