By Danilo Masoni
MILAN - A buoyant media sector following a new bid for British pay-TV firm Sky drove European shares higher on Thursday, helping them to stabilise after heavy losses in the previous session when fears of an escalating trade war hit markets.
The region's media index rose 1 percent, with Sky up 2.2 percent after U.S.-based Comcast submitted a $34 billion bid for the group a few hours after Rupert Murdoch's 21st Century Fox raised its offer.
Sky traded above Comcast's recommended offer price of 14.75 pounds as investors bet Fox would make another higher bid.
"Fox has spent 18 months going through the UK regulatory process to acquire Sky and we don't believe 1400p is likely to be its final offer," Credit Suisse analysts led by Matthew Walker said in a note.
They lifted their price target on the stock to 16 pounds.
Europe's media index has outperformed the market this month, underpinned by the bidding war for Sky but also helped by expectations of a lift to advertising sales from the World Cup soccer matches for broadcasters such as France's TF1 and Britain's ITV.
ITV however fell 1.1 percent on Thursday after England was defeated in the semi-final by Croatia, which will face France in the final.
Goldman Sachs said the World Cup boost for ITV was already priced in and it downgraded the stock to neutral, while lifting its rating on TF1 to buy, which helped send the stock up 3.7 percent.
The pan-European STOXX 600 index was up 0.3 percent by 0903 GMT. Losses among energy and financials curbed gains in the healthcare and consumer sectors, which have recently been favoured for their defensive qualities in the face of worries that a trade war could hurt global growth.
Elsewhere earnings updates drove share price moves.
Gerresheimer rallied 8.9 percent after the German drugs packaging maker raised the lower end of its revenue growth guidance and unveiled a 350 million euro acquisition to expand in the field of digital drug delivery devices.
Norwegian bank DNB dropped 3.9 percent after its second quarter earnings fell short of expectations.
Overall investors are expecting a solid earnings season in Europe. According to the Thomson Reuters IBES data, second-quarter earnings for the companies on the euro zone's MSCI EMU index are expected to grow 8.1 percent.
(Reporting by Danilo Masoni; editing by David Stamp)