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Europe: Stocks rebound; bank shares lag after poor HSBC, BNP results

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[MILAN] European shares bounced back on Friday as good company results rolled in, but bank stocks were left behind after poor updates from HSBC, BNP Paribas and Societe Generale.

Broad-based gains lifted the pan-European Stoxx 600 index, which rose 0.6 per cent. The banking index, recently penalised by softer economic data and cooling expectations about monetary policy tightening, was among the worst-performing sectors, rising 0.2 per cent.

The recent fall in the euro has helped Europe outperform Wall Street in recent weeks, with the euro zone index posting its sixth straight week of gains.

"The euro has remained under pressure this week on declining expectations about the timeline of an expected tapering of the ECB's bond buying program. Yesterday the latest EU inflation numbers saw an unexpected decline in inflation on both the headline rate as well as on core prices," said Michael Hewson, analyst at CMC Markets, in a note.

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On Friday, solid updates lifted shares in German chemicals firm Lanxess, British Airways owner IAG and Swiss drug ingredients maker Lonza to the top of the Stoxx.

Sports car maker Ferrari rose 7.7 per cent to a record, as brokers welcomed its better-than-expected quarterly update.

HSBC declined 1 per cent after it reported an unexpected 4 per cent drop in first-quarter pre-tax profit, although its new chief executive sought to cheer investors with a share buyback of up to US$2 billion.

BNP Paribas fell 1.2 per cent and Societe Generale lost 5.2 per cent after a weak-looking set of first-quarter results from the French banks.

Foreign exchange was blamed by BMW for a 3 per cent drop in quarterly operating profit. Shares in the German luxury carmaker were down 0.7 per cent.

Air France dropped nearly 3 per cent after the airline said it expected profits to fall this year because of strikes at its main French unit.

REUTERS