European shares gain as tech strength offsets oil jump

By Tharuniyaa Lakshmi, Purvi Agarwal and ‌Avinash P

July 21 (Reuters) - European shares ​rose on ​Tuesday as gains in technology and mining shares took the focus away from fresh strikes in the Middle East, which pushed oil prices higher, while investors sifted through a fresh round ‌of earnings reports.

Brent crude jumped more than 2.5% after U.S. forces bombed targets in ⁠the south and west of Iran overnight.

The pan-European STOXX 600 index climbed 0.6% to 643.19 points at close, breaking a two-day losing ‌streak.

Technology stocks rose 2.1%, the most on ‌the index, with ASMI and ASML, gaining 5.4% and 4.7%, respectively.

Earnings from major technology companies such as Alphabet in the U.S. will be on watch this week for clues on the sustainability of AI-related demand ​and whether their lofty valuations can be justified.

"We have seen these ebbs and flows in sentiment... that highlights the sort of the nervousness that there is surrounding tech, particularly the AI and chip trade," ⁠said Fiona Cincotta, senior market analyst at City Index.

"But if we do see another solid season, that could actually be a catalyst for the next ​leg higher in tech stocks."

Markets will also be on the lookout for earnings from major banks such as Banco Santander and BNP Paribas later in the week.

"Improving returns ​on equity are not yet reflected in valuations for European ‌banks, which still trade at close to a 30% discount to U.S. peers," said analysts at Lombard Odier Investment Managers.

Miners climbed 1.7%, tracking higher copper and gold prices, although ⁠Swedish miner Boliden fell 5.7%, after a weaker-than-expected quarterly adjusted operating profit.

On the flip side, the media sector was the biggest laggard, down 1.4%.

Wienerberger shares fell 4.1% to their lowest since 2022, after the building materials maker issued a full-year profit ⁠warning, citing deterioration in new-build activity.

Swiss bank Julius Baer dipped 4% despite reporting stronger-than-expected first-half net new money inflows, while lift maker ​Schindler dropped 5.4% after its quarterly sales missed market expectations.

Novartis shares gained 2% after the drugmaker beat second-quarter core operating profit estimates.

Mitie soared 39% after rival OCS Group International agreed to buy the British outsourcer for £3.1 billion ($4.17 billion).

Focus will also turn ‌to commentary from European Central Bank policymakers at their monetary policy meeting on Thursday, where they are expected to hold interest rates steady.

Still, market participants are pricing in ‌at least one 25-basis-point hike by end-2026, according to LSEG-compiled data.

In Britain, new Prime Minister Andy Burnham appointed former defence ⁠secretary John Healey as finance minister, just weeks ‌after he resigned from the previous ​government with a stinging rebuke of how the Treasury had fallen short on defence spending.

(Reporting by Tharuniyaa Lakshmi, Purvi Agarwal and Avinash P in Bengaluru; Editing by Nivedita Bhattacharjee and ‌Mrigank Dhaniwala)

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