Insurers lift European markets

A trader checks share prices at the Frankfurt Stock Exchange

LONDON, England (Reuters) -- European stocks extended gains in late trade on Wednesday, thanks to a robust insurance sector inspired by solid results from Swiss Re and a broker upgrade for Swiss Life.

Also helping was a rebound on Wall Street as Tuesday's intense concerns that top Internet gear maker Cisco Systems was set to warn on profits receded as the stock rose with no announcement from the firm.

This helped Europe's technology sector pare its initial heavy losses, although telecom equipment makers like Finland's Nokia continued to dominate the blue-chip loser board.

"There's relief that there hasn't been any particularly bad news out of the United States, but the focus remains on earnings, both there and in Europe,'' said David Thwaites, pan-European equities strategist at BNP Paribas.

Struggling Internet company Yahoo reports earnings after the close, and fellow U.S. tech titans Honeywell, Motorola, Sun Microsystems, and Gateway step up to the plate next week, along with UK chip designer ARM Holdings and Dutch electronics giant Philips.

"The first quarter should mark the trough in earnings, but judging by the market's negative reaction to recent warnings from the likes of IBM, there's little room for disappointment,'' Thwaites said.

At 1600 GMT, with most markets closed, the Eurotop 300 index was 0.87 percent higher, roughly in the middle of a trading range first established in November.

This left the pan-European index of blue chips about two percent down so far in April and slightly down in the year to date, illustrating the extent to which shares have struggled to make headway despite mounting evidence of economic recovery due to concerns over company earnings and valuations.

The narrower Euro Stoxx 50 rose 0.95 percent.

On Wall Street, the Dow Jones industrial average was up one percent, while the tech-laden Nasdaq Composite gained 0.41 percent.

The DJ Stoxx insurance index was the best-performing sector, rising more than two percent after Deutsche Bank raised Swiss Life to "buy'' from "market perform,'' and rival Swiss Re posted a narrower than expected 2001 net loss and repeated it would return to big profits in 2002.

Swiss Life was up 0.95 percent, while Swiss Re gained 2.34 percent. France's AXA and Germany's Allianz each added more than three percent.

Shares in Germany's second-biggest bank HVB Group, meanwhile, soared almost five percent after dropping almost four percent on Tuesday after a court ruled that householders can still annul mortgages sold to them years earlier on their doorstep.

"The ruling appears not to affect HVB as much as initially feared and it seems investors are shifting funds out of tech,'' said Christian Schmidt, a trader at Helaba in Frankfurt.

But Danish Novo Nordisk, the world leader in diabetes care, lost nearly a quarter of its value after warning 2002 earnings would fall short of expectations due to weak European insulin sales.

Elsewhere in pharmaceuticals, AstraZeneca gained 3.49 percent and was the biggest blue-chip riser after Goldman Sachs raised the Anglo-Swedish group's price target.

Shares in Credit Lyonnais leapt 4.54 percent after Commerzbank CEO Klaus-Peter Mueller said the German bank would look to shed its four percent stake in the French bank if its shareholder structure was reorganised as expected.

The French government is expected to move towards a sale of its 10 percent stake after the presidential elections next month but traders said the Commerzbank comments spark speculation the French government could move earlier.

Basic producers were hit after ABN AMRO bank turned from "positive'' to "negative'' on the sector, saying it did not expect strong demand for metals in the second half.

Oils stocks were weaker as crude prices remained little changed after their recent rollercoaster ride amid tensions in the Middle East. Among the oil shares, TotalFinaElf fell 0.47 percent.