* STOXX 600 up 0.6 pct, at fresh 16-month high
* U.S. investors returning to European equities
* Dialog Semi top faller for second day on Apple risk
* Peer AMS gains on brokers' read-across
* Tesco drops as analysts point to weaknesses in results
By Helen Reid
LONDON, April 12 European shares rose on
Wednesday, driven by gains in financial stocks and carmakers, as
the first-quarter earnings season kicked off and a rise in the
oil price underpinned energy stocks.
The pan-European STOXX 600 index was up 0.6 percent
by 0900 GMT, having hit a fresh 16-month high earlier. Britain's
mid-caps hit a fresh record high at 19,412.43 points, up
Earnings improvements are drawing U.S. investors back to
European equities after being net sellers for eleven consecutive
months last year, UBS said in a note, highlighting accelerating
inflows to European ETFs while U.S. ETFs see modest outflows.
Ahead of first-quarter results season, earnings are expected
to increase 7.1 percent year-on-year, according to Thomson
Reuters I/B/E/S data. Seven of the ten sectors should see an
improvement in earnings relative to Q1 2016.
Auto stocks were the best performers, up 1.1
French auto parts manufacturer Faurecia gained 2.2
percent after it posted first-quarter sales up 10 percent to
4.23 billion euros. Deutsche Bank said strong results over
consecutive semesters should feed through into a valuation which
is one of the lowest in the sector.
German luxury carmaker Daimler gained 1.2 percent
after it said first-quarter profits jumped 87 percent on strong
British aerospace and defence company Meggitt was a
top riser after Bank of America Merrill Lynch upgraded the
stock, citing an attractive cash growth story.
Norwegian fertilizer maker Yara was a top gainer after
Goldman Sachs added the stock to its 'conviction list', raising
it to a buy.
Dialog Semiconductor was the top European faller
for a second day, down 3.9 percent. It fell 14 percent on
Tuesday after an analyst report said its biggest client Apple
could be seeking to ditch its power management supply (PMIC) in
favour of creating the parts itself.
"Apple PMIC insourcing fears appear overdone for Dialog,"
said Deutsche Bank, reiterating a 'hold' rating on the stock.
Peer Austria Microsystem was a top-performing stock,
up 5.5 percent. It had fallen 9.5 percent in the previous
session on concerns around Apple suppliers.
Deutsche Bank analysts named AMS as one of their preferred
stocks in the technology hardware sector. Several brokers said
the weakness was a buying opportunity.
Britain's biggest retailer Tesco was a top faller,
down 3.6 percent as analysts pointed to a few negatives in its
full-year results, including slowdown in UK and Ireland margins.