European shares notch modest gains as Mideast war tempers earnings cheer

By Tharuniyaa Lakshmi, Johann M Cherian ‌and Niket Nishant

July 16 (Reuters) - ​European stocks ​posted slim gains for the third straight session on Thursday, as caution over the Middle East war kept markets in a tight range despite strong earnings.

The pan-European STOXX 600 index ‌inched 0.16% higher to 643.73 points.

So far, hopes that the earnings season would pull ⁠attention away from geopolitics and back to corporate fundamentals, thereby offering equities a fresh catalyst, have not borne fruit.

The STOXX 600 index ‌is up just 0.41% this week, despite ‌strong results from ASML, the dominant supplier of equipment needed to make high-tech computer chips.

On Thursday, basic resources stocks were the biggest laggards on the benchmark, with a decline of 1.38%. Media shares led ​the index with a 1.43% gain.

Tech stocks were flat despite Taiwan's TSMC reporting a record 77% jump in second-quarter profit.

ASML jumped 3.16%, while semiconductor stocks STMicroelectronics and BE Semiconductor slipped 4.91% and 3.20%, respectively.

The ⁠sector has shown signs of cooling this month following a strong run in the previous quarter.

Still, investors continue looking ahead to what is expected to ​be Europe's strongest earnings season in more than three years.

"The thing that Europe has going for it is that valuations are much more favourable. And that hasn't ​changed," said Randy Baron, portfolio manager at Pinnacle Associates.

Renewed U.S.-Iran hostilities ‌have prompted investors to ramp up bets for at least one 25-basis-point rate hike by the European Central Bank by the end of the year, data compiled by ⁠LSEG showed.

But if the conflict eases, Europe's investment outlook could brighten again.

"For the time being, we prefer to be neutral (on) U.S. versus Europe, and slightly overweight Europe as far as we believe the conflict can abate again," said Michele Morganti, senior ⁠equity strategist at Generali Investments.

"We think that Europe can then recover in terms of the economic momentum, and earnings can ​recover too."

Among individual companies, shares of Delivery Hero were flat. Uber said it launched a public takeover offer valuing the German food delivery company at about $14.8 billion.

Delivery Hero has rallied nearly 70% so far this year following reports of the imminent bid.

ABB ‌slipped 5.91% after it announced a $5.5 billion takeover of automation company Rotork, and it said its second-quarter operating profits beat expectations. Rotork's shares soared 66.78%.

In regional earnings, ‌Swedish industrial technology group Indutrade jumped 17.08% after reporting better-than-expected second-quarter results.

Telenor tumbled 11.64% after the Norwegian telecom operator cut ⁠its 2026 outlook following weaker-than-expected second-quarter earnings.

French ‌advertising group Publicis rose 3.07% after ​reporting higher first-half revenue, driven by strong demand for AI-driven marketing services.

(Reporting by Tharuniyaa Lakshmi, Johann M Cherian and Niket Nishant in Bengaluru; Editing by Rashmi Aich, Diti Pujara and ‌Nia Williams)

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