European shares edge higher as earnings counter lockdown worries

(Reuters) – European stocks inched higher on Tuesday as strong earnings from Swiss bank UBS, consumer giant Reckitt Benckiser and others offset concerns from tighter coronavirus curbs across the continent and doubts over fresh U.S. stimulus.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 15, 2020. REUTERS/Staff

The pan-European STOXX 600 .STOXX rose 0.2%, reversing from losses at the open.

Ireland announced some of Europe’s toughest COVID-19 constraints on Monday, while Italy, Spain and Britain also imposed curbs to limit the spread of new coronavirus cases that now threaten to derail a budding economic recovery.

“What we’re likely to see is concerns about near-term growth, and I wouldn’t be surprised if we saw weakness in markets on the back of that,” said Nick Peters, multi-asset portfolio manager at Fidelity International.

“Thinking 6-12 months out, we’re assuming that local lockdowns will be successful and there should be better news about vaccine.”

Earnings were a bright spot. UBS UBSG.S rose 2.6% as it posted a 99% jump in quarterly profit, while Swedish bank Swedbank SWEDa.ST gained 0.3% after it reported a bigger-than-expected rise in quarterly net profit.

Computer peripherals maker Logitech International LOGN.S surged 18.9% after it raised its full-year forecast.

Reckitt Benckiser RB.L added 2.5% after it lifted its full-year outlook as the coronavirus pandemic boosts demand for its cleaning products.

Meanwhile, European stock markets run by Euronext ENX.PA resumed normal trading after it was plagued by technical glitches the previous day. France’s CAC 40 .FCHI, one of the markets hit by the glitch, rose 0.5%.

Robust demand in the United States and China helped cognac maker Remy Cointreau RCOP.PA post a broader recovery in second-quarter sales, but its shares slipped 1.3%, while those in Pernod Ricard PERP.PA gained 1.8%.

Swedish telecoms operator Tele2 TEL2b.ST fell 6.2% after it stuck to its outlook for roughly unchanged operating profit in 2020.

“The numbers themselves are relatively unimportant. What most investors are looking at it is how strong 2021 recovery will be,” said Peters.

Third-quarter profits for companies on STOXX 600 are expected to drop 36.7%, according to Refinitiv data, improving from a 51% plunge in the previous quarter when economic losses from the pandemic peaked.

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