[BENGALURU] European stocks moved towards record highs on Thursday, following a set of strong company earnings and as the European Central Bank left policy unchanged as expected.

Heavyweight Nestle rose almost 3 per cent after reporting its strongest quarterly sales growth in 10 years, while software group SAP and French spirits group Pernod Ricard were among some of the other stocks to surge after results.

Credit Suisse, meanwhile, fell 2.1 per cent after a hit from the collapse of US investment fund Archegos wiped out what would have been a stellar trading period, leaving it with a slightly smaller-than-flagged quarterly pre-tax loss of 757 million Swiss francs.

The pan-European Stoxx 600 index rose 0.7 per cent, extending gains for a second day, after fears of a new wave of Covid-19 cases pushed European markets to their worst day in 2021 on Tuesday.

While global investors remain nervous about a resurgent coronavirus crisis in Asia and stretched valuations in parts of US equities, European stocks have enjoyed strong gains this year as Covid-19 vaccination drive and stimulus programmes lift hopes of a strong economic rebound.

The ECB's decision to keep rates unchanged as widely expected sets the stage for a battle at the June 10 meeting, when policymakers have to decide whether to slow bond buying, even if that means allowing borrowing costs to drift higher.

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"If the more optimistic projections for the vaccination rollout really materialise... the next batch of staff projections (in June) could show an upward revision to the growth forecasts and a confirmation of the economic recovery in the second half of the year," said Carsten Brzeski, global head of macro at ING.

Shares of renewable energy companies such as Vestas and Siemens Gamesa surged, with Vestas jumping 10 per cent for its best day in a month, after the Biden administration on Thursday pledged at a US climate summit to slash US greenhouse gas emissions in half by 2030.

Birkin bag maker Hermes was up 2.1 per cent as strong growth in Asia powered a 44 per cent surge in quarterly sales.

European companies are set to exit a two-year profit slump with a record jump that outperforms US peers, with profits for companies on the Stoxx 600 forecast to have risen 61 per cent in the first quarter, as per Refinitiv IBES data.

Among other decliners, Britain's biggest defence contractor BAE Systems lost 5 per cent as it faced mounting criticism for handing its chief executive an extra 2 million pounds (S$3.72 million) to convince him to stay.

REUTERS