Earnings lift stocks, but Italy woes weigh

Tue Nov 8, 2011 7:14am EST
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By Jeremy Gaunt LONDON (Reuters) - European shares climbed sharply and Wall Street was set to join in on Tuesday as positive corporate earnings allowed stock investors to look beyond the euro zone debt crisis.

Italian bond yields eased slightly but remained close to unsustainable levels as lawmakers in Rome readied for a crucial vote on public finances.

The euro slipped against the dollar.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 1.4 percent, lifted by the likes of Vodafone (VOD.L: Quote) , which edged its full-year outlook higher on growth in emerging markets.

Marks & Spencer (MKS.L: Quote), Britain's biggest clothing retailer, also rose after a fall in profit that was not as bad as some had expected.

"Companies have beaten expectations, but that is against lowered expectations," Jeremy Batstone-Carr, strategist at Charles Stanley, said. "There may be a good share price reaction on the day, but it tends not to last.

Corporate earnings have been one of the few bright spots for investors this year as rolling crises have destroyed appetite.

Investors on Tuesday shifted their attention from Greece -- where attempts are still underway to form a consensus government to keep the country in the euro zone -- to Italy, where Prime Minister Silvio Berlusconi is under intense pressure to resign.

Ten-year Italian bonds were yielding more than 6.6 percent, closing in on the 7 percent level that prompted Ireland and Portugal to seek bailouts.   Continued...

<p>Passersby look at an electronic board displaying a rise in major market indices around the world, outside a brokerage in Tokyo October 27, 2011. REUTERS/Issei Kato</p>