Strong updates help European shares climb to two-week high

MILAN: European shares hit a two-week high on Thursday as strong results from Dutch bank ING and UK phone group BT helped offset a disappointing update from Credit Suisse, and ASM International brought some cheer to chipmakers.

The STOXX 600 rose 0.5 percent by 0941 GMT, building on Wednesday's rally when fresh optimism over the earning season helped ease worries over slowing economic growth and political risk which sent the pan-European index close to two-year lows in October.

The UK's FTSE however lagged behind, down 0.1 percent, as the pound strengthened after a British official said London was close to sealing a deal that would give UK-based financial services firms basic access to European Union markets.

ING rose 5.1 percent after the largest Dutch bank reported a better-than-expected profit of 776 million euros, as it continued to grow on an underlying basis despite being fined for failures to prevent money laundering.

"ING's earnings are mainly boosted by the lower cost/income ratio as its cost cuts seem to start reaping benefits," said Jauke de Jong, a research analyst at AFS Group in Amsterdam.

BT rallied 8.6 percent after it reported a better-than-expected 2 percent rise in first-half earnings and nudged its guidance for the full year higher. The stock was on track for its best day since May 2013.

Results from ING and BT lifted the banks and telecoms indexes up 1.1 and 2.1 percent respectively, bringing relief to sectors which are among the worst perfomers so far this year in Europe and have suffered due to their poor earnings outlook.

BHP Billiton rose to a two-week high after the mining giant said it would return $10.4 billion to shareholders, sticking to a promise to hand back all of the proceeds from the sale of its U.S. shale business.

ASM International rallied 15 percent to the top of the STOXX 600 and was track for its biggest one day gain since 2009 after issuing a bullish outlook, countering fears of a downturn in the semiconductor market.

Credit Suisse was a weak spot.

Its shares fell 2.7 percent after its third-quarter net profit fell short of expectations, even after the bank said it would return to the black in the full year for the first time since Tidjane Thiam became chief executive in 2015.

Oil stocks also fell after Shell slightly missed expectations, sending its shares down 1.8 percent.

Profits at the Anglo-Dutch oil major however soared to a four-year high in the third quarter, boosted by rising oil prices as the company accelerated its giant $25 billion share buyback programme.

Investors cheered the strong rise in its cash generation.

"It's all about the incredible cashflow story today... we recommend being heavily invested as the company is well on track to deliver its 2020 FCF plan," Bernstein analyst Oswald Clint wrote in a note.

Seismic oil services firms TGS dived 9.6 percent to its lowest since early May after its third quarter operating profit fell more than expected.

Overall, European earnings are expected to have risen 14.2 percent in the third quarter, up from a previous forecast of less than 13 percent, according to the IBES Refinitiv data.

By the end of the week, companies representing around 40 percent of the STOXX 600's market cap will have reported quarterly results.