European stocks edge up, helped by luxury firms

European shares were steady in mid-day trade yesterday at three-year highs with luxury goods group Richemont shining after it said it was selling a clothing chain and was upgraded by a broker.

Indexes steadied after jumping more than one per cent on Wednesday and European exporters rose, boosted by the euro languishing near eight-month lows after the Dutch joined the French in rejecting the EU Constitution.

At 1030 GMT, the FTSEurofirst 300 index was 0.07 per cent higher at 1,121.3 points, around its highest level since June 2002.

Richemont shares rose 2.4 per cent after it said it was selling its men's clothing subsidiary Hackett to Spanish investment company Torreal. Although the price was not disclosed, analysts speculated further brand sales could follow.

UBS raised its rating on the maker of Cartier watches and Lancel handbags to buy from neutral and increased its price target for Richemont to 44 Swiss francs ($35). The firm is expected to release strong full-year results on June 9.

"Our estimates are at the higher end of consensus... but this is not to say we think all good news is in the price. Richemont remains the cheapest stock in our sector," JP Morgan analyst Melanie Flouquet said in a note.

Fellow luxury firms LVMH and Christian Dior benefited from Richemont's performance and the euro's weakness to add 1.6 per cent and 1.3 per cent respectively.

Swiss confectioner Nestle was another strong gainer, adding 1 percent after Morgan Stanley raised earnings per share forecasts.

The recent weakening of the euro also boosted auto exporters with DaimlerChrysler gaining one per cent and BMW 1.7 per cent.

Porsche shares also rose one per cent on a 35 per cent surge in its US car sales in May and a positive note from CSFB. Fiat was supported by rumours it will find a buyer for its telecoms arm after selling part of the financing arm of its truck division.