Europe: Evergrande relief, earnings prop up stocks

[BENGALURU] European stocks rose on Friday on a surge in technology stocks, strong earnings from France's L'Oreal and a broad boost to sentiment provided by a surprise interest payment from debt-ridden China Evergrande Group.

The Stoxx 600 added 0.5 per cent to close at over six-week highs and logged its third consecutive week of gains, up 0.5 per cent.

News that the Chinese property developer had made a bond payment to avert a default lifted the mood globally.

Worries about contagion from a potential default have rattled markets recently.

France's blue-chip CAC 40 rose 0.7 per cent and outperformed its European peers, riding on a 5.1 per cent surge in L'Oreal shares following the cosmetics company's strong results.

Shares in Dutch semiconductor equipment maker ASML and German software firm SAP rose 3.2 per cent and 1.2 per cent respectively, after stumbling earlier this week following their results. The tech sector rose 1.5 per cent.

Investors appeared to look past a survey that showed growth in euro zone business activity slowed in October as firms face soaring costs due to supply-chain constraints, while the bloc's dominant service industry struggled amid ongoing Covid-19 concerns.

Automaker Renault and Continental both flagged chip-shortage hitting output and margins.

"We've lots of earnings beats on lowered expectations, and then you're getting comments from CEOs suggesting supply chains are damaged - but certain firms have said that they're on top of it," said Keith Temperton, sales trader at Forte Securities."That's hopeful for the markets."

A bunch of upbeat earnings lifted Wall Street's S&P 500 to a record high, while its European counterpart is less than 1 per cent shy of its August peak.

Europe Inc is expected to see a 47.6 per cent rise in third-quarter profit to 96.1 billion euros (S$150.9 billion), latest data from Refinitiv I/B/E/S showed, a slight improvement from last week's 46.7 per cent growth forecast.

Euro zone inflation expectations hit their highest levels in years, putting additional pressure on the European Central Bank over its insistence on maintaining crisis-era stimulus. The central bank is set to meet next week.

"That inflation is transitory does not necessarily mean that it is short-lived. An adjustment of supply to the changes in patterns of demand caused by the pandemic may be slow, and keep upward pressure on prices for longer," strategists at Citi wrote in a note.

Swedish mining firm Boliden dipped 6.8 per cent as its third-quarter operating profit fell below market forecasts.

Remy Cointreau rose 1.8 per cent after it said it was growing increasingly confident about its full year outlook after second-quarter sales beat expectations.

REUTERS