STOXX 600 edges higher on financial gains ahead of key earnings

By Johann M Cherian and Ragini ‌Mathur

Feb 16 (Reuters) - The ​STOXX 600 ​index edged higher on Monday as financial shares rallied, with investors turning their attention to a busy week of corporate earnings that could shed light on the ‌health of corporate Europe.

The pan-European index closed 0.13% higher at 618.52 points, with Spain's ⁠bank-heavy benchmark leading gains among regional markets, rising 1%.

European shares hit a volatile patch in late January and through early ‌February on worries that newer ‌artificial intelligence tools could squeeze profits of traditional businesses.

FINANCIALS RISE AS AI FEARS RECEDE

However, a better-than-feared earnings season, in the face of steep U.S. tariffs, helped the STOXX index to touch a ​record high last week and log its third-straight week of gains.

Banks and insurance stocks had been mired in AI-disruption worries last week, with the lenders index logging its biggest one-week drop ⁠since late-March 2025. On Monday, lenders bounced back with a 1.4% rise, while insurance stocks added 0.7%.

"The AI scare trade is on ​hold as we start a new week," said Kathleen Brooks, research director at XTB.

"There is a growing sense that fears about AI swallowing up large swathes ​of global jobs and industries are overdone and this ‌week could see a recovery in some of the sectors that have seen the worst of the selloff."

The rebound in heavyweight banks offset weakness in the ⁠technology and luxury sectors, which dropped 1% and 1.9%, respectively.

Shares of French software company Dassault Systemes declined 10.4%, driven by investor worries over the company's challenging 2029 revenue and cloud targets.

Basic materials shares were also down, losing ⁠0.6% after their recent strong run.

RESULTS DUE LATER THIS WEEK

With Monday relatively quiet on the earnings front, attention now ​shifts to results due later this week from Orange, Zealand Pharma, Airbus and BE Semiconductor.

So far, 60% of European companies have beaten earnings expectations, compared with 54% seen in a typical quarter, according to data compiled by LSEG. ‌Further, earnings are expected to have fallen 1.1%, versus about a 4% drop earlier in the month.

On the economic front, euro zone industrial production rose ‌1.2% year-on-year in December, down from a 2.5% increase the prior month, at a time when investors are ⁠anticipating that fiscal stimulus measures are ‌reviving the sector.

Among others, Orsted gained ​4.5% after brokerage Kepler Cheuvreux raised the Danish offshore wind developer to "buy" from "hold".

(Reporting by Johann M Cherian and Ragini Mathur in Bengaluru; Editing by Mrigank Dhaniwala and ‌David Holmes)

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