Euro stocks edge up

a government decision to shut all the country’s nuclear reactors by 2022.
Volumes were thin as both US and UK markets were closed for a public holiday. At 0900 GMT, the FTSEurofirst 300 index of top European shares was up 0,1 percent at
1 135,55 points, adding to the previous session’s gains.
Parties in German Chancellor Angela Merkel’s coalition government agreed yesterday to shut all the country’s nuclear reactors by 2022, while keeping a disputed nuclear fuel rod tax.
“Although it has been rumoured for quite a while that the extension of the lifespan of German nuclear power plants will be revised again the outcome of the final exit from nuclear power comes to the detriment of German utilities E.ON and RWE,” Silvia Quandt Research analyst Sebastian Zank said.
German utilities took a beating, with RWE down 2,3 percent and E.ON down 1,6 percent, while French nuclear group Areva dropped 4,6 percent. The sector sharply dropped last March when a massive earthquake and tsunami hit Japan and sparked a nuclear crisis. RWE has lost 17 percent since March 11, and E.ON is down 15 percent.
“We expect that the companies will have to adjust their guidances, including the dividend, for full-year 2011 and probably the years thereafter, because so far both companies assumed that the stopped nuclear power plants will be back online after the moratorium,” DZ Bank analyst Marc Nettelbeck said.
Shares in renewable energy companies gained ground following the German government decision yesterday. SolarWorld rose 6,2 percent, Q-Cells surged 8 percent and Renewable Energy Corp added 4,4 percent.
The eurozone’s blue-chip Euro STOXX 50 index was up 0,2 percent at 2 825,60 points, but remained below the low end of a downward gap opened last Monday, which has become a key resistance level.
“The index’s upward movement is a correction of the previous fall. We will turn ‘negative’ on strength,” Day By Day technical analysts wrote in a note.
Despite the mixed technical picture for European stocks, Societe Generale’s cross asset research team suggests, as a trading idea, to go long on the Euro STOXX 50 index and short on LME aluminium.
“Hard commodities could suffer further if growth disappoints in Europe . . . Much of the bad news is already priced in for the European equity markets, and Euro STOXX dividend yield of 4,3 percent is supportive,” they wrote in a note. – Reuters.