UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Lufthansa shares soar; Credit Suisse earnings beat expectations

European stocks closed modestly higher Tuesday, with markets wrapping dealings in July by absorbing a new round of corporate earnings reports, including well-received results from Swiss banking heavyweight Credit Suisse.

Updates on inflation and economic growth figures from the eurozone were in focus, and investors cheered the possibility of trade talks restarting between the U.S. and China.

How markets performed

The Stoxx Europe 600 indexclosed up 0.2% at 391.61, overcoming choppy action during the session. The oil and gas and basic materials groups were top advancers, while the technology and telecommunications sectors lost the most ground. On Monday, the index fell 0.3% (http://www.marketwatch.com/story/european-stocks-fall-from-6-week-high-as-trade-tech-woes-linger-2018-07-30)

For July, the pan-European benchmark ended up by 3.1%, the first monthly gain since April.

The U.K.'s FTSE 100 index advanced 0.6% to end at 7,748.76, topped by mining stocks which are sensitive to developments surround China, a major metals consumer. France's CAC 40 index closed up 0.4% to 5,511.30, and ended July higher by 3.5% for the month.

Germany's DAX 30 index ended Tuesday's session up by just 0.1% at 12,805.50, held back in part by a slump in shares of Fresenius SE & Co. KGaA. But the index closed July up by 4.1%, its best month since April.

Spain's IBEX 35rose 0.1% to 9,870.70, notching a monthly advance of 2.6%.

The euro pulled back to trade at $1.1708, little changed from late Monday in New York.

What drove markets

Stocks wavered during the session as investors tackled a slew of corporate financial results. Among big names, Swiss lender Credit Suisse's second-quarter profit beat expectations, putting it on track for its first annual profit in four years.

Mining shares emerged as strong performers Tuesday following a Bloomberg News report (https://www.bloomberg.com/news/articles/2018-07-31/u-s-china-said-to-seek-to-restart-talks-to-defuse-trade-war) that representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are privately discussing how to re-engage in negotiations aimed at averting a full-blown trade war between the world's largest economies. In May, Mnuchin traveled to Beijing with a trade delegation for two days of talks.

Following on U.S. President Donald Trump's threat of tariffs, the U.S. in July imposed a duty of 25% on $34 billion of Chinese goods, and China responded in kind.

"The U.S. and China have been involved in a tit-for-tat trade spat for the last few months which has weighed heavily on sentiment across the markets. So far there has yet to be positive conclusion from any of Trump's trade talks, but that is not preventing optimism flowing back into the markets," said Fiona Cincotta, senior market analyst at City Index, in a note.

Miners can be sensitive to developments in China, which is the world's largest consumer of copper, an industrial metal. The Stoxx Europe 600 Basic Resources Index climbed 1.2%.

Inflation and GDP in focus

The eurozone's economy slowed further in the three months through June, as exports sputtered and business confidence weakened on worries over trade tensions.

Gross domestic product in the eurozone grew 2.1% (http://www.marketwatch.com/story/eurozone-gdp-slows-again-inflation-rises-to-21-2018-07-31) in the second quarter, year-over-year, Eurostat said in a preliminary reading report Tuesday. Forecasts were for a 2.2% gain, according to a FactSet consensus survey. GDP expanded by 0.3% from the first quarter, compared with expectations for 0.4%.

That lackluster GDP performance contrasts with accelerating economic growth in the U.S. If it continues, the divergence could widen the gap between U.S. and eurozone interest rates.

Eurostat also released a reading on eurozone inflation for July, which rose to 2.1%, further above the European Central Bank's target. The forecast was for a 2% gain, year-over-year. French inflation in July was up 2.3% (http://www.marketwatch.com/story/french-inflation-rises-more-than-seen-in-july-2018-07-31), more than the 2.1% rate anticipated in a Wall Street Journal poll of economists.

In a separate release, Eurostat said the unemployment rate across the eurozone was unchanged at 8.3% in June. However, the number of people without work grew slightly for the first time since July 2017, a sign the economic slowdown may already be weakening the jobs market.

Elsewhere on the economic docket, German jobless claims dropped by 6,000 in July (http://www.marketwatch.com/story/german-jobless-claims-fall-but-less-than-expected-2018-07-31) compared with June, the Federal Employment Agency said. Economists polled by The Wall Street Journal had forecast a decline of 10,000.

Stock movers

Deutsche Lufthansa AG shares (LHA.XE) rallied 8.3% as the German airline raised its unit-revenue forecast for the year. (http://www.marketwatch.com/story/lufthansa-lifts-revenue-forecast-shares-rise-2018-07-31)

(http://www.marketwatch.com/story/lufthansa-lifts-revenue-forecast-shares-rise-2018-07-31)Travis Perkins PLC shares (TPK.LN)tumbled 10.8%. The British building products supplier warned that its earnings will be at the lower end of analyst expectations (http://www.marketwatch.com/story/travis-perkins-warns-on-earnings-launches-review-2018-07-31) because of a challenging consumer market, and said it's launching a review of its business.

Credit Suisse Group AG shares (CSGN.EB) gained 1.1% as the lender said second-quarter net profit more than doubled (http://www.marketwatch.com/story/credit-suisse-net-profit-more-than-doubles-2018-07-31-24853659) to 647 million Swiss francs, above expectations of 596 million Swiss francs.

Fresenius SE & Co. KGaA shares (FRE.XE) slumped 4.3%, the biggest loss on the DAX 30. The German health care company's second-quarter net profit surged 45% (http://www.marketwatch.com/story/fresenius-net-profit-jumps-backs-2018-outlook-2018-07-31). But Fresenius also said it expects that it will be early next year when it can resolve a Delaware court case over Fresenius's decision to pull out of a merger deal with drugmaker Akorn Inc. (AKRX).

Vivendi SA (VIV.FR) shares rose 3.7%. The French media group posted better-than-expected earnings and said that it's looking to sell a stake of up to 50% in Universal Music Group (http://www.marketwatch.com/story/vivendi-shares-rise-on-earnings-beat-umg-sale-2018-07-31).

BP PLC (BP.LN) (BP.LN) shares closed up 1.4% after the energy giant posted second-quarter results (http://www.marketwatch.com/story/bp-profit-soars-as-rosneft-upstream-unit-deliver-2018-07-31). The company said Tuesday that its equivalent to net income more than tripled in the second quarter, propelled by higher earnings in its upstream business and Rosneft Oil Co.

(END) Dow Jones Newswires

July 31, 2018 14:10 ET (18:10 GMT)

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