Europe close: Stocks edge higher on strong earnings

European equity markets rose on Wednesday as investors cheered a raft of solid corporate results.

The benchmark Stoxx 600 index closed up 1.30%, while France’s CAC 40 climbed 1.65% and Germany’s DAX rose 1.57%.

The situation remained a lot bleaker in Greece, however, with the Athex Composite plunging by as much as 3% earlier in the day as stocks in the country’s banks fell almost 30% on average.

Elsewhere, the euro shed 0.10% and 0.42% against the dollar and the pound, respectively, but it gained 0.44% against the yen, while Brent crude futures edged 0.3% higher to $50.14 a barrel.

Wednesday data

In terms of economic data, Eurozone retail sales fell more than expected in June, with Germany doing most of the damage, according to figures released by Eurostat.

Sales in the 19 countries that use the euro fell by 0.6% in June from May, which was a steeper decline than the 0.2% drop expected by analysts.

Meanwhile, the final Eurozone Markit composite output index came in at 53.9, above the 'flash' estimate of 53.7 and better than the 53.9 reading expected, but below June’s print of 54.2.

Across the Atlantic, the US private sector added 185,000 jobs in July compared with a downwardly revised 229,000 in June, payment processor ADP said. The figures fell short of the 210,000 gain analysts had expected.

"The slower pace of private payroll growth reported for July by ADP is broadly in line with our outlook for 200,000 in non-farm and private payroll growth in Friday’s official employment," analysts at Barclays said in a note.

However, there was more positive news out from the Institute for Supply Management, which said its index of services sector activity surged to a 10-year high in July.

Banks' earnings impress

In company news, French bank Societe Generale surged 7.90% after it reported a 25% increase in second-quarter profit and said it plans to target further cost reductions in the coming years.

Italian sector peer Mediobanca gained 1.84% after posting a 79% rise in fourth-quarter net profit on higher interest income and rising fees, while German consumer goods company Beiersdorf rose 3.55% as it reported a 19% increase in second-quarter net profit amid rising sales.

“With the troubles in Greece sidelined for now, continental stock markets look relatively more attractive than those of the UK and US,” said CMC Markets’ analyst Jasper Lawler.

“There is less commodity exposure, a weak currency to support exports and an improving economy as demonstrated by positive service sector released on Wednesday.”

London-listed insurer Legal & General rallied 3.08% after posting a 6% rise in first-half pre-tax profit and an 18% increase in operating profit thanks to strong organic growth in the UK and US, as it raised its interim dividend despite a fall in annuities.

Ryanair climbed 1.60% after the budget carrier said it was the first ever airline to carry over 10m passengers in one calendar month, as traffic grew 11% to 10.1m customers in July.

Going the other way Dutch lender ING slipped 3.49% as its second-quarter results fell short of analysts’ expectations.