By Sruthi Shankar and Shashwat Chauhan
(Reuters) -European stocks advanced on Tuesday as bumper earnings from BP (LON:BP) and higher crude prices propelled energy giants higher, while investors took comfort from fresh stimulus for China's battered financial markets.
The pan-European STOXX 600 index closed 0.7% higher, with the energy index leading the charge, up 2.1%, tracking an advance in crude oil prices. [O/R]
London-listed oil giant BP climbed 5.5% after reporting better-than-expected fourth quarter earnings and accelerating the pace of its share repurchases.
"There are also elements of strong comparatives, particularly in the fourth quarter numbers, when the oil price significantly spiked following Russia's invasion of Ukraine," Richard Hunter, head of markets at Interactive Investor said.
"Even so, BP is well prepared as a business to withstand the cyclical trials which follows a wavering price."
China-exposed miners also added 1.4% amid renewed talks of official support from Chinese authorities, while industrials also gained 1.4%.
Germany's DAX index notched a fresh record high, ending 0.8% higher, lifted by a 3.2% jump in Siemens Energy.
Acting as a catalyst to gains, yields on government bonds across the continent took a breather, with the yield on the benchmark 10-year German note last at 2.291%.
Still, there was an element of caution after Federal Reserve Chair Jerome Powell pushed back firmly against speculation of imminent rate cuts, prompting investors to reassess the trajectory of rates this year.
European stocks reached a two-year high last week, helped by earnings and gains in technology stocks on optimism about artificial intelligence (AI), but strong U.S. data and cautious comments from central bank policymakers have stalled the rally.
Of the 85 STOXX 600 companies that have reported earnings for the fourth quarter so far, 55.3% have beaten analyst estimates, LSEG data showed.
On the downside, Swiss lender UBS it would restart share buybacks and find $3 billion more in cost savings from integrating Credit Suisse (SIX:CSGN). Its shares, however, dropped 4.4% with analysts pointing to slightly lower-than-expected profitability targets.
Italian pump manufacturer Interpump lost 6.9% after brokerage Equita trimmed its estimates and price target on the stock.
Norwegian fabless chipmaker Nordic Semiconductor (OL:NOD) slumped 22.3% after it warned of low revenue into 2024 due to Internet of Things (IoT) sector headwinds.
Meanwhile, investors also appeared to shrug off a reading that showed German industrial orders unexpectedly jumped in December, driven by "an exceptionally" high number of aircraft orders.
A separate European Central Bank poll showed consumers have trimmed their expectations for inflation over the next 12 months, in a sign the ECB's credit-tightening efforts are having an impact.