By Ankika Biswas

(Reuters) -European shares hit an over nine-month high on Wednesday, lifted by positive cues from U.S. Federal Reserve Chair Jerome Powell’s overnight remarks, while Finnish refiner Neste and Norway’s Equinor steered energy stocks higher on upbeat earnings.

The pan-European STOXX 600 was up 0.8%, after hitting its highest level since April 2022 in early trade.

Powell’s remarks that 2023 should be a year of “significant decline in inflation” were interpreted as less hawkish than feared, although he acknowledged that Friday’s blockbuster U.S. jobs report showed why the battle against inflation will “take quite a bit of time.”

“Right now, investors appear to be focusing more on Powell acknowledging disinflationary forces taking hold, rather than his concern about latest jobs reading,” said Susannah Streeter, markets analyst, Hargreaves Lansdown.

“I still think there is underlying worry about just how far rates will have to go.”

On the other hand, a report showed that European Central Bank policymaker Joachim Nagel sees the need for more big interest rate hikes to bring inflation back to 2%, backing the relatively more-hawkish stance held by the central bank.

Hopes of economic resilience and better-than-feared earnings have helped European stocks rebound with a nearly 9% gain this year, after the aggressive global rate-hiking cycle saw them notch their steepest annual decline since 2018.

Oil and gas was the top sector performer in Europe with nearly 2% gains, boosted by a 10% rise in Neste and 6% upmove in Equinor on fourth-quarter earnings beats.

Chemicals stocks also enjoyed strong buying on earnings boost.

German gas giant Linde and Dutch paints maker Akzo Nobel gave higher 2023 earnings forecasts, while Norwegian fertiliser maker Yara proposed a higher-than-expected dividend after its fourth-quarter core earnings beat estimate. Their shares rose between 2% and 6%.

Denmark’s benchmark OMX Copenhagen index hit a record high, boosted by a 9% jump in jewellery maker Pandora on fourth-quarter earnings beat.

Bucking the trend, Sweden’s Handelsbanken slumped 7% to the bottom of STOXX 600 after proposing a lower-than-expected payout for shareholders and forecasting continued higher costs from investments.

Of the 93 STOXX 600 companies that have reported earnings so far, 58.1% trounced market expectations, according to Refinitiv data. In a typical quarter, 53% companies beat earnings estimate.

(Reporting by Ankika Biswas in Bengaluru; Editing by Savio D’Souza and Sherry Jacob-Phillips)