* FTSEurofirst 300 index gains 0.8 percent
* Corporate newsflow helps market
* Barclays, L‘Oreal shares fall sharply
By Atul Prakash
LONDON, Feb 11 (Reuters) - European shares reached a two-week high on Tuesday as encouraging results from companies like BMW and Hexagon boosted optimism ahead of remarks by the new head of the U.S. Federal Reserve that are expected to be dovish.
Measurement technology group Hexagon rose 6.7 percent to the top of the pan-European FTSEurofirst 300 index . Hexagon posted fourth-quarter sales and operating profit in line with expectations and said its sales should grow at least 5 percent in 2014.
Luxury carmaker BMW gained 1.8 percent on record vehicle sales in January. Competing automaker Daimler advanced 2.7 percent after Societe Generale raised its target price for the stock, helping the European auto index to rise 1.9 percent.
“The market is supported by some positive corporate news,” said Daniel McCormack, a strategist with Macquarie. “Equities will further react positively if we get some more positive news on earnings, which has been disappointing.”
At 1223 GMT, the FTSEurofirst 300 index was up 0.8 percent to 1,310.92 points. It had climbed to its highest since late January in a fifth straight session of gains.
Equities may get more help from Janet Yellen, who will testify to the U.S. Congress for the first time as chair of the Fed. Her testimony is expected to be dovish.
UK retailers gained ground after a survey showed British retail sales rebounded in January from a weak December to record their strongest annual growth since April 2011. Debenhams, Kingfisher, Home Retail and Marks & Spencer added 2.5 to 3.6 percent.
However, some analysts remained sceptical about whether the market rally could be sustained.
“On a stock level, good announcements from corporates will clearly be received well, but short-term fears over emerging markets are weighing on general investor sentiment at the moment and may well be prompting a bit of profit-taking on any gains,” Oliver Wallin, investment director at Octopus Investments, said.
“We’ve been looking to buy on any dips as our base case for 2014 remains positive, but an apparent reticence from investors to do the same has prompted us to hold back in recent weeks.”
On the downside, some European retailers suffered. Metro fell 3.2 percent after reining in full-year profit expectations when its first-quarter earnings dipped.
Barclays dropped 5.6 percent, the top loser on the FTSEurofirst 300. Investors wondered whether the bank can get return on equity above 11.5 percent by 2016, a target set by Chief Executive Anthony Jenkins. Analysts said cutting costs looked more challenging than expected after Barclays said it would axe up to 12,000 jobs this year.
L‘Oreal lost 3.2 percent. It had hit an eight-month high after underlying sales growth improved more than expected in the fourth quarter and the company announced it would buy 8 percent of its capital for 6.5 billion euros ($9 billion) from Swiss consumer goods group Nestle. Traders said there was some disappointment about the boost to earnings from the buyback. .
Europe bourses in 2014:
Asset performance in 2014:
Today’s European research round-up