European stocks head for best week in seven months – Reuters

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 12, 2021. REUTERS/Staff

  • Banks lead morning gains
  • STOXX set for 2.1% weekly rise
  • Hugo Boss boosted by forecast lift
  • Rio Tinto slips on production cut

Oct 15 (Reuters) – European stocks were headed for their best weekly performance in seven months on Friday, as a bright start to the earnings season helped ease investor concerns about higher inflation.

The pan-European STOXX 600 index (.STOXX) rose 0.3%, on course to end the week with a more than 2% gain after a sharp rebound in risk appetite in the past two sessions.

Banks (.SX7P) were the top gainers in Europe, up 1.4%, after forecast-beating quarterly results on Thursday from four of Wall Street’s biggest lenders on an economic rebound and deals bonanza. read more

Retailers (.SXRP), oil & gas (.SXEP) and travel (.SXTP) all rose between 0.9% and 1.1%, while defensive utilities (.SX6P) fell the most.

“A renewed focus on the bottom-up news has helped global equities over the last couple of sessions, and results from the U.S. banking sector delivered another significant boost to indices overnight,” said Peel Hunt analyst Ian Williams.

While European banks are trading near pre-pandemic highs, U.S. banks (.SPXBK) have surged to record highs recently.

Euro zone banks have lagged U.S. by a wide margin

European earnings kicks into high gear in the next few weeks, with analysts expecting a near 47% jump in third-quarter profit for companies listed on STOXX 600, as per Refinitiv IBES data. Energy and industrial companies are forecast to provide the biggest boost to the earnings performance.

Europe’s inflation upswing is still seen as temporary and there are no signs yet that the recent surge is becoming embedded in wages, European Central Bank President Christine Lagarde said on Thursday.

Investors have fretted over rising inflation caused by a global energy crisis, supply-chain bottlenecks and labour shortages slowing a corporate profit rebound from the pandemic shock.

“Slowing China growth and global inflation concerns could bring headwinds to risk assets,” Citi analyst Aaron Lui said in a note. “Global equities are likely to be under pressure in coming months.”

UK-listed shares of Rio Tinto (RIO.L) fell 1.4% after the Australian miner cut its 2021 iron ore shipments forecast, citing a tight labour market, while Swiss banking software firm Temenos (TEMN.S) tumbled 12.8% after its results. read more

German fashion retailer Hugo Boss (BOSSn.DE) climbed 2.1% after it raised its outlook for the current year after third-quarter earnings rebounded on the back of strong demand in Europe and the Americas. read more

French cloud computing services company OVHCloud (OVH.PA) rose 4.5% in its Paris stock market debut. read more

Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila

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