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Europe: Relief bounce for shares as earnings reassure

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[LONDON] European shares rallied on Wednesday as a tumultuous October drew to a close and strong results from L'Oreal, Sanofi and banks Standard Chartered and Santander soothed investors' nerves.

The pan-European Stoxx 600 closed up 1.74 per cent with France's CAC 40 jumping 2.3 per cent.

Despite its gains, the Stoxx 600 posted its worst month since January 2016 after global equity markets reeled from sudden sell-offs and a pick-up in volatility this month.

The euro zone stocks index had its worst monthly performance since August 2015.

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Investors were licking their wounds after a testing October for global stock markets which saw US stocks sell off sharply, joining in the already bearish trend of other developed markets.

"Markets are going to have to get on board with the idea earnings are not going to grow by 20 percent every quarter," said Kevin Gardiner, global investment strategist at Rothschild Wealth Management.

"I suspect in a way the markets are digesting that."

L'Oreal shares jumped 6.7 per cent after sales growth at the company, whose brands include Maybelline, picked up pace in the third quarter, driven by booming demand in Asia.

This bucked the trend of results so far warning of slower Chinese growth.

"Management hosted a confident conference call reiterating confidence in the goal of achieving organic sales growth ahead of global market growth in 2018," wrote Liberum analysts.

Shares in French pharmaceuticals giant Sanofi rose 6.7 per cent after it confirmed its return to growth with higher-than-expected third-quarter profits and raised its 2018 profit target for the second time this year.

Banks Santander and Standard Chartered rose 2.9 per cent and 3.1 per cent respectively after both lenders reported better results, helping boost sentiment in the battered banks sector.

Outside of earnings, the market was lifted by oil and gas stocks as crude prices jumped, and tech stocks which have been among the worst hit by this month's slide.

Earnings disappointments still took big chunks out of some stocks.

Finnish tyre maker Nokian sank 10 per cent after it cut its profit outlook, blaming unfavourable currency moves, high inventory levels in Russia, and lower new car sales in the Nordics for a surprise fall in quarterly earnings.

Nokian was the latest in the autos sector to report weaker profits due to slowing car sales.

Eutelsat shares dived 14.4 per cent after the satellite firm cut its revenue guidance.

Drugmaker Swedish Orphan Biovitrum dropped 13.6 per cent after it cut its full-year outlook due to development costs, even though it lifted its sales forecast after a strong performance by haemophilia drug Elocta.

REUTERS