European shares rise on strong earnings; BP profit shines

European shares extended gains on Tuesday, after the European Central Bank chief eased concerns around faster monetary policy tightening this year, while investors also found comfort in a positive corporate earnings season.

The benchmark STOXX 600 rose 0.7%. Miners led gains for the second straight session, advancing 0.5% to track their best two-day session in nearly a month, after China metallurgical coal futures surged on supply woes and demand recovery. [IRONORE/]

“It’s encouraging that we’re seeing some signs of stabilisation in the markets after so much monetary tightening has been priced in, but there’s still potential for further downside,” said Craig Erlam, senior market analyst at OANDA.

The STOXX 600 index is struggling for direction following five consecutive weeks of losses in 2022, as jitters over rate hikes and supply tensions are weighed against a positive fourth-quarter earnings season.

German government bond yields edged higher and remained below their recent highs on Tuesday after ECB President Christine Lagarde tried to appease rate hike jitters on Monday, saying there is no need for big monetary policy tightening in the euro zone as inflation could stabilise around 2%.

“Lagarde’s comments will be taken with a pinch of salt as the central bank has been behind the curve so much, at least until we start to see signs of inflation peaking and an indication that we’ll see a significant decline. But we haven’t seen that yet, so reassurances are likely to fall on deaf ears,” Erlam added.

Markets are now pricing in 50 basis point rate hikes this year but economists are cautious, with most predicting the first move either at the end of the year or early 2023.

Meal-delivery firm Just Eat Takeaway slipped 2.3% on plans to delist from the Nasdaq stock exchange in a bid to limit costs and regulatory burdens.

Energy giant BP (LON:BP) gained 0.9%, after reporting its highest profit in eight years of $12.8 billion in 2021 and boosting its share repurchase targets to $1.5 billion a quarter from $1.25 billion earlier.

EDF (PA:EDF) skid 2.8%, after the French state-controlled power group made new cuts to its nuclear output projections.

French lender BNP Paribas (PA:BNPP) fell 2.4% on reporting lower-than-expected pre-provision fourth-quarter profit hit by higher costs.

Swedish Security services group Securitas gained 1% after posting higher quarterly profit and saying demand for airport security, which plunged early in the pandemic, was recovering.