Upbeat earnings drive European shares higher; Barclays, Deutsche Bank jump

By Shubham Batra

(Reuters) -European shares rose on Thursday driven by a raft of positive earnings, with upbeat results from Deutsche Bank and Barclays overshadowing worries over the U.S. banking sector’s health.

The pan-European STOXX 600 index was up 0.2%, led by automobile shares, rising 1.0%.

Investor concerns over the health of the U.S. banking sector calmed on Thursday, as First Republic Bank recovered slightly in U.S. premarket trading after hitting a record low on Wednesday.

“Earnings season in the U.S. is a meaningful driver. Some of the large tech names delivered better-than-expected results,” said Richard Flax, chief investment officer at Moneyfarm.

“On the negative side, (there is) this ongoing question about U.S. regional banks and how that’s going to be resolved. That seems to be weighing a little bit on sentiment towards financials globally.”

European banking shares rose 0.9% led by Barclays Plc that climbed 4.3% on an estimate-beating quarterly profit, as a resilient performance from its consumer bank offset pressure on other key business lines.

Deutsche Bank AG also rose 2.2% following a better-than-expected rise in first-quarter profit, as income from higher interest rates offset a slump in revenues at the investment bank.

Danish software firm SimCorp was the top gainer on STOXX 600, surging 38% after receiving a 3.9 billion euro ($4.31 billion) bid from German exchange operator Deutsche Boerse.

Some of Europe’s biggest drugmakers including Roche, Novo Nordisk and GSK rose more than 1%, following heavy losses on Wednesday.

AstraZeneca Plc added 0.9% on beating expectations for its first-quarter profit and revenue on sales of some of its oncology and rare blood disorder drugs.

Unilever Plc climbed 1.5% on better-than-expected quarterly underlying sales, as the Dove soap maker raised prices yet again to compensate for higher commodity and supply chain costs.

Media shares, however, dropped 1.5% as Universal Music Group fell 4.8% after it posted a lower first-quarter core profit.

STMicroelectronics NV lost 4.5% despite forecast-beating first-quarter results, as investors worried the slowdown in semi-conductor industry would eventually catch up with the company.

European equities have gained more than 1% so far in April, buoyed by upbeat corporate earnings, moving over worries of the banking sector that pulled the index down last month. But uncertainty over interest rate hikes still looms large.

Euro zone consumer confidence improved slightly in April compared to a month ago, data showed.

($1 = 0.9048 euros)

(Reporting by Shubham Batra in Bengaluru; Editing by Sherry Jacob-Phillips)