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Europe: Stocks bounce back as strong earnings in focus

[LONDON] Investors piled back into European stocks on Wednesday, boosting indexes higher in a relief rally after geopolitical concerns caused a sharp dip across equity markets.

The pan-European STOXX 600 gained 0.6 per cent, recovering nearly all the ground lost in the previous session when North Korea's missile launch sparked a sell-off.

Euro zone stocks and blue-chips rose in line.

Banking stocks, which had led the risk-averse move lower on Tuesday, were the strongest performers, up 0.9 per cent, helping Italy's bank-heavy index outperform.

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Investors' focus turned back to encouraging earnings news on Wednesday, driving gains across all sectors.

Though European stocks have seen some sharp moves in recent weeks, punctuating an unusually calm year, sell-offs have tended to fizzle out as shares are supported by global investors' continued confidence in the region's economic growth and relatively cheap valuations compared to the U.S. market.

Earnings growth also provided support. With the majority of company reports through, Thomson Reuters data estimated earnings growth for the STOXX 600 at 16 per cent year-on-year for the second quarter.