European shares get earnings boost

London - European equities climbed higher in cautious trading ahead of rate decisions by central banks on Thursday, with reassuring earnings results from major companies such as Alcatel-Lucent and AkzoNobel boosting their shares.

Telecoms equipment maker Alcatel-Lucent surged 9.5% after seeing encouraging results from its cost-cutting measures, a tweaked product offering and asset sales.

It missed consensus revenue forecasts, but its gross margin and operating profit beat expectations.

Dutch paints and chemicals firm AkzoNobel rose 6.6% after reporting higher-than-expected earnings and saying it would meet its 2015 targets.

But some companies disappointed investors on the earnings front. Drugmaker AstraZeneca fell 3.1% after saying it expects earnings to continue to fall in 2014.

"The earnings season has been mixed. Possibly we will some easing of the downward revisions to 2014 earnings estimates, but we have to be aware that a double-digit earnings growth this year is a little bit ambitious," said Gerhard Schwarz, head of equity strategy at Baader Bank.

"We have seen a hefty decline (in European shares), but overall we should not be too much worried because the fundamentals of the market have not changed much. The outlook for the equity market is staying constructive, but we need to be cautious."

At 09:04 GMT, the FTSEurofirst 300 index of top European shares was up 0.4% at 1 277 points.

Investors avoided strong bets ahead of a European Central Bank meeting. Following a recent surprise fall in inflation, pressure has risen on the ECB to ward off the risk of the euro zone slipping into deflation.

The Bank of England also holds a meeting, but is likely to keep rates unchanged.

Analysts said a message from the ECB that it stands ready to act should things deteriorate from here would reassure investors and support stock markets.

The FTSEurofirst 300 index had tumbled 6% in the past two weeks, its sharpest pull-back in seven months.

The slide was sparked by tepid US and Chinese manufacturing data as well as concerns over the impact on emerging market assets of reduced stimulus from the US Federal Reserve.