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European shares bounce from 22-month low as earnings flow in; Volvo hit

European shares bounce from 22-month low as earnings flow in; Volvo hit
Traders work at Frankfurt's stock exchange in Frankfurt, Germany December 29, 2017. REUTERS/Ralph Orlowski   -   Copyright  RALPH ORLOWSKI(Reuters)
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MILAN (Reuters) – European shares rose in early trading on Tuesday helped by stronger defensive stocks, as the focus turned to the start of the reporting season which is expected to deliver double-digit earnings growth for the third quarter.

The pan-European STOXX 600 <.STOXX> index was up 0.2 percent by 0714 GMT, after hitting a 22-month low in the previous session on the back of risings U.S. Treasury yields and a mix of geopolitical tensions.

Defensive stocks such as utilities <.SX6P> and telecoms <.SXKP> led sectoral gainers with Italian utility Enel <ENEI.MI> up 3.4 percent and Germany’s Deutsche Telekom <DTEGn.DE> up 1.4 percent.

Despite the bounce some caution remained after a turbulent week that saw the STOXX post its worst week since February.

“Investors are… struggling with the ongoing U.S.-China trade war, Brexit talks, Italy’s budget clash with Brussels, EM slow down, and the most recent geopolitical tensions between Saudi Arabia and the U.S.,” said FXTM strategist Hussein Sayed.

Meggitt <MGGT.L> was the biggest gainer in Europe, up 5.6 percent after the UK engineer upgraded its 2018 organic revenue growth guidance, boosted by higher demand for its wheels, brakes, fuel tanks and other aeroplane parts.

Merlin however fell 7.3 percent after its trading update.

Volvo <VOLVb.ST> fell 6.1 percent after the Swedish company warned that some truck engines could be exceeding emission limits because a component was degrading more quickly than expected.

(Reporting by Danilo Masoni; Editing by Keith Weir)

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