* FTSEurofirst 300 up 0.1 pct, EuroSTOXX 50 up 0.3 pct
* Earnings worries keep indexes below multi-month peaks
* BNP Paribas recommends low-cost protection
By Toni Vorobyova
LONDON, Jan 18 European shares edged higher on
Friday, with heavyweight miners and exporters supported by
stronger-than-expected Chinese data, but concerns about the
upcoming corporate earnings season kept key indexes below recent
Chinese retail sales and industrial output rose more than
expected in December, helping fourth-quarter economic growth to
accelerate for the first time in two years.
The better performance from the world's top metals consumer
followed on from stronger U.S. jobs and housing data the
previous session and helped boost miners, with the basic
resources sector up 0.3 percent.
"We've got good numbers out of China, we had some good
number out of U.S. yesterday ... The general sentiment is pretty
good," said Neil Marsh, strategist at Newedge.
"There will probably be some phases of consolidation as we
go forward, but the markets remain pretty resilient," Marsh
added. "More people are putting their cash to work now in
riskier assets, like equities, and there is no sign of that
stopping at the minute."
The FTEurofirst 300 was steady at 1,165.80 points
by 0846 GMT, in sight of a two-year high of 1,170.29 set last
week. The EuroSTOXX 50 added 0.3 percent to
2,724.71, eyeing its recent 18-month peak.
But traders said the market was likely to struggle to break
past those highs ahead of the weekend, with investors concerned
about the European fourth-quarter earnings season which kicks
off in earnest on Monday.
"What we need (to push higher) is strong results from
companies, and expectations are quite low," said Anita Paluch,
sales trader at Gekko Capital Markets.
European companies are expected to report a 1 percent
year-on-year drop in earnings, on average, against forecast for
2.1 percent for U.S. peers, according to Thomson Reuters
On the flip side, low expectations could make it easier for
European companies to deliver positive surprises.
French car maker Renault added 2.3 percent after
pledging a return to sales growth this year.
Investors are meanwhile set to lose a big slice of downside
protection with the expiry of January options, which could leave
the market more vulnerable in case of any selloff. Maturing puts
- which give investors the right to sell the EuroSTOXX 50 at a
pre-set price - outnumber call bets by some 68 percent.
With the euro zone blue chip index up around 3 percent in
the past month, the vast majority of the puts will expire
worthless, in line with the trend seen since mid-2012.
For investors still wishing to protect their holdings but
unwilling to spend more money to do so, strategists at BNP
Paribas recommend buying an at-the-money February put on
EuroSTOXX 50 and selling the equivalent contract on U.S. S&P 500
or on the German DAX, where they expect economic
growth - and thus corporate earnings - to hold up better.