Strong earnings help European shares erase nearly all losses from French unrest

By Reuters News

By Avinash P and Niket Nishant

- European shares rose on Wednesday, recouping nearly all of their losses since the weekend turmoil in France as strong earnings encouraged investors to look past the economic and political uncertainty.

The pan-European STOXX 600 index .STOXX added 0.92% and closed at 644.49 points, led by a 20% jump in Randstad RAND.AS after the Dutch recruiter's management struck a cheerful tone for 2027 following quarterly sales and profit beats.

Ray-Ban maker EssilorLuxottica's ESLX.PA 15.5% jump post earnings also helped the benchmark, and pushed luxury stocks .STXLUXP to their highest in more than five weeks.

The gains show that solid corporate earnings are still capable of bolstering markets even as macroeconomic uncertainty persists, and vindicate investors who had counted on results to keep stocks afloat.

Earnings this quarter have also shown unusual breadth. Third-quarter earnings for the STOXX 600 are expected to grow at one of the fastest rates in years, ​according to LSEG data.

FRENCH STOCKS REBOUND

France's CAC 40 index .FCHI rose for the first time this week, ending 1% higher. Riots erupted over the weekend in the euro zone's second-largest economy, battering sentiment.

France's government said it would ensure a massive deployment of troops to control the violence, but investors advocated caution.

"The politics would sort of continue to be a bit of an anchor on shorter-term performance," said Ben Gutteridge, head of market insights at Invesco.

The European automobiles sector .SXAP fell 1.7%, leading losses.

The STOXX 600 is up about 8% so far this year but remains below the yearly highs it touched in August, as inflation concerns and political jitters have weighed on the index. It has underperformed its US peer, the S&P 500 .SPX, which is up 12.7%.

On Wednesday, Carrefour CARR.PA dropped 13.8% after the supermarket chain cut its annual earnings forecast, saying riots, looting and curfews had raised costs and disrupted trading at its stores.

Tyre maker Michelin MICP.PA declined 7.2% after reporting a drop in nine-month sales.

DSV DSV.CO gained 15% after the transport and logistics firm reported a rise in its third-quarter revenue.

Investors are also awaiting results from SAP SAPG.DE on Wednesday, and Nokia NOKIA.HE and Barclays BARC.L on Thursday for clues on positioning.

On the data front, British inflation rose more than expected last month, bolstering expectations that the Bank of England could raise interest rates at its November meeting. UK's FTSE 100 .FTSE ended 0.19% higher.

"Underlying pressures remain worrying. Strong growth and stable labour-market slack strengthen the case for multiple hikes," economists at Pantheon Macroeconomics wrote.

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