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European shares extend winning streak on earnings boost

European shares extend winning streak on earnings boost
By Reuters
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By Bansari Mayur Kamdar and Ankika Biswas

- European shares marked their longest winning streak since November 2021 on Wednesday, lifted by upbeat earnings, while optimism over China's economic recovery lifted luxury stocks with Hermes hitting an all-time high at one point.

The pan-European STOXX 600 rose 0.2%, extending gains for a sixth straight day on a boost from mining and technology stocks.

ASM International NV jumped 9.8% after the Dutch semiconductor supplier reported fourth-quarter revenue ahead of its forecast, citing better-than-expected supply chain conditions and higher conversion of the backlog.

Richemont rose 0.7% on reporting higher quarterly sales as tourists returned to Europe and Japan. Still, the luxury group missed market estimates after sales in China plunged by almost a quarter.

"For luxury, China is quite important with more hopes of rebounding activity in the first half of this year," said Emmanuel Cau, head of European equity strategy at Barclays Investment Bank.

"The numbers are bad, but I don't think it should come as a big surprise given how bad China was in Q4. The market is probably right to look through the kind of short-term noise because the big picture is also direction of travel is towards more reopening in China."

British peer Burberry rose 3.3% after Chief Financial Officer Julie Brown said she is seeing "very promising" signs in China so far this month, even as the luxury group's sales growth slowed to 1% in the quarter ended December.

Birkin bag maker Hermes closed up 0.2%, having touched a record high earlier in the session.

Europe's benchmark STOXX 600 index has gained 7.7% in an upbeat start to 2023, spurred by hopes of a rebound in China's economy as Beijing relaxed its strict COVID-19 restrictions, easing price pressures amid a fall in natural gas prices and growing expectations of a mild recession.

German Chancellor Olaf Scholz said in an interview with Bloomberg TV that he was convinced Europe's largest economy would not fall into a recession, despite soaring energy and food prices in the wake of Russia's invasion of Ukraine.

In the UK, data showed British consumer price inflation fell to a three-month low of 10.5% in December, offering some comfort to the Bank of England and households.

However, the STOXX 600 came off its session highs, with Wall Street slipping after hawkish comments from Federal Reserve policymakers doused hopes of a downshift in the pace of interest rate hikes. [.N]

Miners were among the top gainers in Europe on Wednesday, with shares of Glencore and Anglo American jumping 4% and 2.5%, respectively, as metal prices rallied on hopes of a pick up in Chinese demand. [MET/L]

In other earnings-driven moves, shares of Just Eat NV rose 4.6% after Europe's largest meals delivery company said it eked out a profit at the operating level for 2022, sooner than analysts had expected, and will remain profitable in 2023.

Swedish private-equity firm EQT fell 6.1% after missing full-year profit estimates.

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