European shares inched higher in morning trade on Friday, helped by encouraging company earnings and a march higher for construction and material stocks led by a rise in 2012 sales targets for French firm Vinci .
Sandvik jumped 10 percent, with volumes hitting 143 percent of its 90-day daily average, after the Swedish machinery and tool maker posted record orders and a surprise rise in quarterly earnings, on the back of strong demand in its industrial tools and mining business.
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The FTSEurofirst 300 index of top European shares was up 0.1 percent at 1,045.09 points at 0850 GMT after falling to a low of 1,034.54 earlier in the session following a two-notch cut in Spain's credit rating overnight.
The STOXX Europe 600 Construction and Materials index rose 1.3 percent, boosted by a 4.1 percent rise in Vinci.
France's largest construction and concessions company lifted its 2012 sales target after first-quarter revenue rose 6 percent on strong orders outside Europe and brisk construction business.
But the euro zone's blue chip Euro STOXX 50 index was still down 0.3 percent to 2,314.71 points. Its technical chart showed that the index could face further pressure.
"We are in an overriding consolidation phase and given the weakness of countries like Spain and Italy and the composition of the Euro STOXX 50, I see the relative weakness of this index for quite some time," Petra von Kerssenbrock, analyst at Commerzbank, said.
She said the index hovered in a trading range and a resistance was seen near its 200-day moving average at around 2,350. The index could find support at around 2,238 - a low on April 23. Below that, it has a massive support near 2,200 - a December low.
Investors remained cautious after Standard & Poor's cut its rating on Spain by two notches late on Thursday, reminding investors that the region's debt woes will continue to scare markets.
The credit agency, citing expectations Spain's finances will deteriorate even more than thought due to the recession and the country's ailing banking sector, downgraded the country to BBB-plus from A and put a negative outlook on the credit.
"This downgrade shows that governments in Europe are still struggling to get their budget in balance. We are probably going to see more downgrades from other rating agencies," Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels, said.
"You will continue to see this consolidation phase for some more time as the newsflow is likely to be predominantly negative. Investors should stay on the defensive side such as utilities in the current environment."
Banks, many of which are heavily exposed to many deb-laden European countries, fell 0.1 percent. Norway's DNB fell 8.8 percent after missing first-quarter profit expectations due to a big one-off financial charge and warned meeting its full-year target would be "challenging".
Among other sharp movers, Ireland-based building materials group CRH rose 2.8 percent and volumes were 113 percent of its 90-day daily average in less than two hours of trading, as JPMorgan lifted its rating for the firm to "overweight", citing valuation and scope for upside earnings surprises.