By Medha Singh
(Reuters) – European stocks recovered from a weak start on Thursday, helped by strong earnings from Swedish telecoms gear maker Ericsson as signs of continuing political barriers to a Brexit deal hit domestically-focused UK firms.
By 0820 GMT, the pan-European STOXX 600 <.STOXX> was little changed, with bourses in Germany <.GDAXI>, Spain <.IBEX> and Italy <.FTMIB> rising about 0.2%.
Ericsson <ERICb.ST> was the index’s top performer, jumping 6.4% after posting quarterly core earnings that were well ahead of expectations and lifting its 2020 sales target. Shares of Finnish peer Nokia <NOKIA.HE> also gained 3.4%.
“There was a consensus view on Ericsson that maybe they’ve disappointed on the margins which was holding people back,” said Mark Taylor, sales trader at Mirabaud.
“But there’s a lot of demand to get into the 5G theme, and Ericsson’s probably the biggest, most liquid name in Europe to play that theme.”
Coming off its best weekly performance since February, the STOXX 600 has fallen modestly since last Friday in a week dominated by worries over whether UK will be able to seal a deal to smoothly leave the European Union by Oct. 31.
Northern Ireland’s Democratic Unionist Party maintained on Thursday that it could not support the withdrawal agreement proposed by Prime Minister Boris Johnson and the European Union in its current form.
That stoked doubts over whether Johnson will be able to win the British parliament’s approval for any deal, although talks are continuing.
“We also know that if the DUP doesn’t go for it, then it’s likely that neither will many of the hardline pro-Brexit Conservative MPs who’ve rejected the deal in the past,” said ING economist James Smith.
London’s blue-chip FTSE 100 <.FTSE> outperformed with a 0.4% rise as the index’s export-focused firms benefited from a weakness in the pound. The domestically-focused midcaps index <.FTMC>, however, dropped 0.3% and Irish shares fell 0.3%
Fears of a slide into recession continue to dog Europe and not all earnings were upbeat, with banking software maker Temenos <TEMN.S> tumbling more than 13%, its worst day in more than four years, after traders said third-quarter core profits missed expectations.
Nestle <NESN.S> was the biggest drag on the benchmark index as organic sales growth dipped in the third quarter, outweighing the announcement of a plan to buy back up to 20 billion Swiss francs ($20.13 billion) in shares.
Shares of Pernod Ricard <PERP.PA> slipped 2.8% after the spirits maker missed expectations for quarterly organic sales, reflecting slower growth rates in China and India and French car parts group Faurecia <EPED.PA> dropped 6.9% after posting lower-than-expected third quarter sales.
(Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Bernard Orr and Patrick Graham)