By Anisha Sircar and Sruthi Shankar
(Reuters) -Europe's main stock index edged higher on Tuesday as gains in mining and technology shares helped offset losses in Sweden's Ericsson (BS:ERICAs), which reported a hit from global supply chain problems.
The pan-European STOXX 600 rose 0.2%, with miners, utilities and technology stocks leading morning gains.
Technology shares were also behind a rise in main Asian indexes, as they mirrored an overnight rally in their peers on Wall Street.
"European markets are still taking the lead from offshore markets," said Thomas Mathews, markets economist at Capital Economics.
"With rates starting to rise and inflation picking up, the days of big, sustained rallies in the market are over, but we can expect to see European equities grinding higher for a while."
Capping overall gains in the market, telecom equipment maker Ericsson fell 3.3% following its quarterly results, while French food group Danone slipped 0.8% after recording rising costs and slower sales growth in the third quarter. [nL8N2RF0KD]
As Europe's third-quarter reporting season kicks into high gear, investors are scrutinising company results for any signs that supply-chain strains, labour shortages and surging energy prices are starting to undermine profits.
Third-quarter profits at European companies are expected to grow 46.7% from the same period in 2020, according to Refinitiv I/B/E/S data, with earnings revisions by analysts cooling recently but still remaining positive.
"It's hard to see how further optimism about earnings would boost the market too much at this point just because of how much good news is already discounted in share prices," Mathews added.
The STOXX 600 has gained 2.8% so far in October after a 3.4% drop in the previous month, as investors turned to riskier assets in expectation of a steady earnings season.
However, adding to recent market volatility, investors have been aggressively pricing in interest rate hikes, particularly in the UK, to offset a surge in energy prices and other bottlenecks driving general prices higher.
UK's FTSE 100 rose about 0.1%, boosted by miners as copper prices rose, buoyed by decades-low supplies and an extreme shortage of readily available metal in exchange warehouses. [MET/L]
Swedish telecoms operator Tele2 slipped 3.4% after posting quarterly core earnings in line with market expectations.
Telecoms and healthcare sectors fell 0.5% and 0.2%, respectively, weighing on the markets.