European shares regain some poise after Cyprus rout
* EuroSTOXX 50 up 0.4 pct, taking 2013 gains to 0.9 pct * Some investors looking to boost quarterly profits * Euro zone peripheral markets under pressure * SocGen recommends buying euro zone on dips By Toni Vorobyova LONDON, March 26 (Reuters) - European stocks regained a degree of poise in early trade on Tuesday, with some investors buying to boost quarterly returns, but uncertainty about the broader implications of Cyprus's bailout kept a lid on gains. Cyprus secured a last-minute international rescue package over the weekend, avoiding a possible default and, potentially, a messy euro zone exit. But market relief was short-lived on Monday, after the head of euro zone finance ministers said the deal - which will see Cyprus wind down its second biggest bank and land large depositors with heavy losses - was a model for dealing with future euro zone banking crises. He later moved to play down that statement, and European Central Bank officials lined up on Tuesday to say Cyprus was a special case. But shares in Greece, Italy and Spain remained under pressure, as investors fretted about what might happen next in the euro zone's struggling states. Broader European indexes, though, edged higher as investors - who have enjoyed only modest gains in euro zone equities so far this year - took advantage of the weakened market in a fibnal attempt to boost their first quarter returns. The EuroSTOXX 50 index of euro zone blue chips was up 0.4 percent at 2,658.76 points by 1115 GMT, taking its gains for 2013 so far to just 0.9 percent. The pan-European FTSEurofirst 300 added 0.3 percent to 1,189.60 points, with investors also looking ahead to U.S. data in coming days for a potential positive catalyst. "We are still concerned in the aftermath of the Cyprus crisis, so the confidence of investors is not back in the market, but we are kind of back to business," said Oliver Roth, head of dealing at Close Brothers Seydler. "We have low interest rates, we have some hope for an improving economy so the basic environment is still in good shape. We've seen some insecurities ... (but) I am still optimistic that we will reach the all-time high on the DAX in the next couple of weeks. The German benchmark was up 0.4 percent at 7,898.26 points, edging slowly towards the high of 8,151.57 points hit in July 2007 and on track to be the first of the major European indexes to completely erase the slump that started in 2007. The DAX has benefited from a combination of the relative strength of Germany and its economy within the euro zone - which has supported the index at times of risk aversion - and from the strong weighting of exporters, which have benefited from improved global economic growth. The EuroSTOXX 50 implied volatility index - a crude barometer of risk aversion based on the prices of options - edged down on Tuesday from the previous session's three-week high. However, the index, known as VSTOXX, remained well above the lows hit earlier this month. "Confidence has been shattered and every headline will be scrutinised and volatility will increase - if for no other reason then because people will be on vacation," said Nick Xanders, who heads up European equity strategy at brokerage BTIG, referring to the upcoming four-day Easter weekend. Among the sectors, financials were mixed, with some investors using the recent weakness as an opportunity to buy the bigger, safer names, while the likes of Caixabank and Monte Paschi, remained under pressure. "In the banking sector I think the market will be more cautious, but will also discriminate the bad from the best and that is what we are starting to see," said Vincent Guenzi, chief strategist at Cholet Dupont, highlighting BNP as a possible winner. Analysts at Societe Generale recommended using a 'buy on the dips' strategy to gain broader exposure to euro zone equities. "Euro zone equities are trading at a 46 percent discount to U.S. equities ... We argue they deserve a closer look as many reforms shaped to bring medium- to long-term benefits have been adopted in Spain and Italy," they said.
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