Europe: Shares bounce from 22-month low as earnings flow in

[MILAN] European shares rose in early trading on Tuesday helped by stronger defensive stocks, as the focus turned to the start of the reporting season which is expected to deliver double-digit earnings growth for the third quarter.

The pan-European STOXX 600 index was up 0.2 per cent by 0714 GMT, after hitting a 22-month low in the previous session on the back of risings US Treasury yields and a mix of geopolitical tensions.

Defensive stocks such as utilities and telecoms led sectoral gainers with Italian utility Enel up 3.4 per cent and Germany's Deutsche Telekom up 1.4 per cent.

Despite the bounce some caution remained after a turbulent week that saw the STOXX post its worst week since February.

"Investors are... struggling with the ongoing US-China trade war, Brexit talks, Italy's budget clash with Brussels, EM slow down, and the most recent geopolitical tensions between Saudi Arabia and the US," said FXTM strategist Hussein Sayed.

Meggitt was the biggest gainer in Europe, up 5.6 per cent after the UK engineer upgraded its 2018 organic revenue growth guidance, boosted by higher demand for its wheels, brakes, fuel tanks and other aeroplane parts.

Merlin however fell 7.3 per cent after its trading update.

Volvo fell 6.1 per cent after the Swedish company warned that some truck engines could be exceeding emission limits because a component was degrading more quickly than expected.

REUTERS