* EuroSTOXX 50 up 0.4 pct, taking YTD gains to 0.9 pct
* Some investors looking to boost quarterly profits
* SocGen recommends buying euro zone on dips
By Toni Vorobyova
LONDON, March 26 European stocks regained some
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 any gains.
Cyprus secured a last-minute international rescue package
over the weekend, avoiding a possible default or a potentially
messy euro zone exit.
But market relief proved 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 financials
were mixed on Tuesday, with Spanish and Italian banks, such as
Caixabank and Pop Milano, losing 2-3
percent, while others, like BNP Paribas traded steady
or even edged higher.
"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, with the weakest banks
being deeply sold," said Vincent Guenzi, chief strategist at
Cholet Dupont, highlighting BNP Paribas as a possible winner.
Most other sectors managed to make some headway, as
investors - who have enjoyed only modest gains in euro zone
equities so far this year - took advantage of the weakened
market in a last-ditch attempt to boost their quarterly returns.
The EuroSTOXX 50 index of euro zone blue chips was up 0.4
percent at 2,658.47 points, taking its gains for 2013 so far to
just 0.9 percent. The pan-European FTSEurofirst 300
added 0.2 percent to 1,188.79 points.
"We hooked masses of selling yesterday afternoon, but in the
absence of a 'bad news chaser', now we can have the quarter-end
rally, so watch those new shorts being squeezed," said Justin
Haque, broker at Hobart Capital Markets.
In Britain, where the FTSE 100 has risen 8.2 percent this
year, in part thanks to a weaker pound, traders said the
opposite trend could occur, with investors locking in profits
ahead of a four-day Easter break rather than trying to make more
money. The FTSE 100 added 0.1 percent, lagging its euro
zone peers on Tuesday.
Analysts at Societe Generale reiterated their neutral stance
on British stocks - citing dividends as a chief attraction -
while upgrading their already overweight-rated euro zone and
advising investors to use any dips as a buying opportunity.
"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.