Large-cap companies on Friday pulled European stocks higher as a surge in the UK’s Vodafone Group PLC and strong earnings for media businesses and Nestle SA spurred recovery from a sell-off driven by the European Central Bank (ECB).
The pan-European benchmark index rose 0.3 percent, bouncing back from its worst session in three weeks.
London’s FTSE 100 outperformed European peers with a 0.8 percent advance, helped by telecoms companies.
Vodafone gained 10.6 percent to record it strongest performance since late 2002 on plans to separate its towers unit in Europe into a new company worth upwards of 18 billion euros (US$20 billion) with a view to a potential stock market listing.
The STOXX 600 telecoms index rose 2.3 percent as shares of Cellnex Telecom SA, Europe’s biggest towers group, gained 3.3 percent and Telecom Italia SpA rose 4.1 percent after Vodafone agreed to jointly roll out 5G in Italy and merge their mobile mast operations.
However, media stocks led the gains after upbeat results from France’s Vivendi SA, satellite operator SES and education company Pearson Education.
Another blue-chip stock to perform well was Nestle, which rose nearly 2 percent after posting its fastest quarterly sales growth in three years.
“There has been a more positive set of corporate earnings since yesterday’s close and chiefly Vodafone,” City Index Group analyst Ken Odeluga said.
European shares took a beating on Thursday after ECB President Mario Draghi all but pledged to ease monetary policy further and even hinted at a reinterpretation of the bank’s inflation target, but disappointed some investors who had hoped for an immediate cut to interest rates.
Despite Thursday’s blip, the main STOXX index posted a 0.8 percent gain on the week, driven partly by hopes of policy easing from the ECB as economic data point to a worsening outlook for Europe’s already slowing economy.
“There is a bit of reassessment and the market has attracted some buyers back due to the big selling yesterday,” Odeluga said.
“We also had the US GDP [data], which was not as bad as expected and allows investors to go into the weekend with a bit more positive sentiment,” he said.
US data showed that economic growth slowed less than expected in the second quarter, although it did little to deter expectations that the US Federal Reserve will cut interest rates by 25 basis points next week.
Among the weak spots, Banco Sabadell SA and CaixaBank SA fell more than 6.5 percent.
Luxury stock Kering SA slumped 7 percent as its main Gucci brand reported a slower-than-expected rise in second-quarter sales, hit by a blip in the US.
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