European second-quarter corporate profit outlook dips

(Reuters) -The outlook for European corporate health has slightly deteriorated, the latest earnings forecasts showed on Tuesday, marking a change of direction after several weeks of improvement.

European companies are expected to report growth of 4.6% in second-quarter earnings, on average, according to LSEG I/B/E/S data. That is slightly below the 4.8% rise analysts had expected a week ago.

Since the European Union struck a framework deal with the United States in July and the U.S. and China extended their tariff truce for another 90 days last week, market sentiment has been steadily improving.

Before July, forecasts for Europe-wide STOXX 600 company earnings had steadily worsened since U.S. President Donald Trump announced plans for "reciprocal" tariffs in February. Analysts had expected second-quarter earnings to grow 9.1% year-on-year right before the announcement, according to the data.

The consensus for revenue also continued to worsen slightly, the LSEG report showed. Analysts now expecting a 1.5% fall, compared with a 1.3% drop expected last week.

That compares with a 3.0% increase in earnings and a 0.8% drop in revenues a year ago.

(Reporting by Marleen Kaesebier and Javi West Larrañaga)

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