European shares on Friday hit their highest level in nearly two months as investors flocked to technology stocks after positive US earnings overnight, while news of slowing revenue growth from Vodafone Group PLC weighed on telecoms.
The pan-European STOXX 600 rose 0.6 percent to post its fourth straight weekly gain, up 0.2 percent.
Frankfurt’s DAX was the top performer, while Britain’s exporter-heavy FTSE 100 underperformed as a stronger sterling weighed.
Exuberance for tech stocks continued even after Intel Corp delivered a profit and sales warning after the closing bell, blaming a slowdown in China and sluggish demand for its data center and modem chips.
The sector hit its highest level since Nov. 11 last year.
Investors instead drew comfort from better-than-expected earnings from other US chipmakers earlier in the session: Xilinx Inc, Lam Research Corp and Texas Instruments Inc.
The sector has been hit hard by fears about stagnating smartphone demand and a cooling Chinese economy after sales warnings from Apple, Samsung and Taiwan Semiconductor Manufacturing Co (台積電) earlier this month.
This week, though, investors have pounced every morsel of good news — chipmaker STMicro’s gloomy near-term guidance was ignored on Thursday in favor of its outlook for a strong second half.
“So much of the bad is priced in,” Accendo Markets analyst Mike van Dulken said.
The market was also bracing for key events next week.
The US Federal Reserve’s meeting on Wednesday would be closely watched for signs that the US central bank will delay its steady rate-hike cycle, while Washington and Beijing are to hold the next round of talks aimed at ending their festering trade spat.
The negotiations come as a March 1 deadline to resolve the dispute looms.
However, the chances of a truce are low, with both sides divided over major issues like China’s protection of its intellectual property.
“We’ve got a month until the deadline and it’s probably going to go down to the wire. The markets will be up and down until then on the soundbites from both sides,” Van Dulken said.
On Friday, a key German business morale indicator fell for the fifth straight month this month, while the European Central Bank’s (ECB) survey of professional forecasters pointed to sharply lower growth and inflation.
ECB President Mario Draghi on Thursday said that a dip in the 19-member eurozone’s economy could be deeper and longer than thought even a few weeks ago.
Automakers and parts suppliers, which are sensitive to trade frictions and the health of the Chinese economy, were the strongest performers, hitting Dec. 3 highs.
Mining and oil stocks also gained.
Telecoms were one of only two sectors in the red after disappointing results from Vodafone and Nordic telecom group Telia AB.
Vodafone was down 2.3 percent, hitting its lowest in nearly nine years after the world’s second-largest mobile operator said revenue growth slowed in the third quarter of last year due to ongoing price competition in Spain and Italy and a slowdown in South Africa.
The stock was knocked hard on Thursday after its South African unit issued disappointing results.
Telia was down 3.5 percent, at the bottom of the STOXX 600 after its weaker-than-expected results.
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