By Medha Singh and Lisa Pauline Mattackal
(Reuters) - Upbeat corporate earnings boosted European stocks on Wednesday after a 1% drop in the previous session, but sentiment remained fragile as the U.S. and China head into critical trade talks and Britain's smooth EU exit remains doubtful.
The pan-European STOXX 600 index <.STOXX> was up 0.3% after a sluggish start to the session. All major country indexes were higher, with Frankfurt shares <.GDAXI> leading gains.
The export-heavy FTSE 100 blue-chip index <.FTSE> underperformed peers after sterling jumped on a report that the European Union was ready to agree to a major concession in Brexit negotiations.
"Markets appear to be making the calculation that even if no (Brexit) deal is agreed by the end of the week or the month, an extension will happen, and a no-deal Brexit avoided, at least in the short term," CMC Markets analyst Michael Hewson said.
The deeply uncertain future for Brexit, coupled with mounting concerns around an economically-damaging Sino-U.S. trade war, has knocked about 3% off the benchmark index in October, erasing all it's September gains.
Washington's move to impose visa restrictions on Chinese officials late on Tuesday aggravated worries after the addition of more Chinese companies to a U.S. trade blacklist, making investors skeptical of a quick resolution to the protracted trade war.
Talks between the world's top two economies are set to resume on Thursday.
Companies with strong earnings reports were leading gains on the STOXX 600 index. British bookmaker GVC <GVC.L> rose 3.9% after raising its full-year core earnings forecast for the second time in three months.
Dutch online food delivery company Takeaway.com <TKWY.AS> gained 0.4%, as it reported an 87% increase in third-quarter orders.
The news pushed up shares of peers Just Eat <JE.L> and Delivery Hero <DHER.DE> by 1.2% and 0.3%, respectively.
Still, demand for healthcare <.SXDP>, telecoms <.SXKP> and real estates <.SX86P> stocks - commonly considered defensive sectors - indicated caution among investors.
(Reporting by Medha Singh in Bengaluru; Editing by Bernard Orr)
