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Tech recovery, Italian banks help European shares bounce back from 7-week lows
June 13, 2017 / 9:45 AM / 3 months ago

Tech recovery, Italian banks help European shares bounce back from 7-week lows

* STOXX 600 up 0.6 pct

* Tech sector rebounds

* Italian lenders lead banks

* Capita jumps as recovery on track (Adds quotes and detail, updates prices)

By Kit Rees

LONDON, June 13 (Reuters) - A recovery in tech stocks and fresh optimism over Italy’s troubled banking sector lifted European shares off 7-week lows on Tuesday, while a bounce in Capita boosted British equities.

The pan-European STOXX 600 index was up 0.6 percent, almost fully recovering losses from the previous session, while Italy’s benchmark rose 1 percent.

Europe’s tech sector eased back after Monday’s sell-off when concerns over valuations in U.S. companies had spilled over to European peers, particularly companies supplying Apple.

“The tech sector has been relied upon as the driver of the bull-run, particularly in the U.S., so whenever there is any weakness that’s observed there, it is quickly picked up by the market,” Jonathan Roy, advisory investment manager at Charles Hanover Investments, said.

“The sector is fairly well-valued, in some respects quite richly-valued, so that could be a weakness if we do see a souring in sentiment.”

Dialog Semiconductor, Infineon and ASM International were among the top gainers in the sector, up around 2 to 3 percent while the broader sector rose 1.3 percent.

Italian banks were another bright spot, buoyed by renewed hopes over a bailout for struggling Veneto banks, with the Italian economy minister saying that the country was “close” to a solution amid talks with the European Union. Italian lenders UBI Banca and BPER Banca led the European banking index, rising 4.6 percent and 2.1 percent respectively, while UniCredit also gained 1.4 percent.

“It’s quite evident that the authorities are not too keen to let any institutions really, really fail ... there’s always a last-minute deal done for them,” Charles Hanover Investments’ Roy said, adding that he saw value in Italy and Spain over the next 18 to 24 months.

Among individual stocks, shares in troubled British outsourcing firm Capita jumped 12 percent after the group reiterated its outlook, saying that it hoped to improve its profitability and secure more contract wins in the second half of 2017 following a series of profit warnings.

Visitor attractions group Merlin Entertainments fell around 2.5 percent, however, after striking a cautious tone in its outlook and saying that attacks in Manchester and London had hit domestic demand.

Broker action also propelled shares in London Stock Exchange Group 4.4 percent higher after Credit Suisse and RBC raised their target prices on the stock. This helped Britain’s FTSE 100 gain 0.2 percent.

Strength in the energy sector also helped underpin gains, with Petrofac the biggest oil & gas riser. (Reporting by Kit Rees; Editing by Hugh Lawson)

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