European shares tread higher on ASML, earnings boost

By Pranav Kashyap and Shashwat Chauhan

(Reuters) -European shares gained on Wednesday with heavyweight ASML jumping on a report that the Dutch chip equipment manufacturer would be exempted from a new U.S. rule on foreign chip equipment exports, while a slate of positive earnings further aided gains.

The pan-European STOXX 600 index finished 0.8% higher, touching an over two-week high earlier in the session, clocking a monthly advance of over 1%.

The tech sector led gains across the major STOXX sectors, jumping 2.6% with ASML surging 5.6% following a Reuters report that signalled it may be spared many of the new U.S. restrictions being considered on exports to China.

The aerospace sector added 1.3%, with Airbus climbing 4.8% after the world's largest planemaker published better than expected second quarter results.

London-listed shares of HSBC gained 4% after the lender announced a $3 billion share buyback and upgraded its income outlook.

Macro-data remained in focus, with a fresh reading showing euro zone inflation unexpectedly edged up in July, although a widely watched gauge of price growth in the services sector eased.

"Despite the headline re-acceleration, there are details that should be pleasing to the ECB. Services inflation has slowed from 4.1% to 4.0% YoY, which (is) a component that the ECB is very much focused on," said Janet Mui, head of market analysis at RBC Brewin Dolphin.

"Analysing all the data, there is still a high likelihood that the ECB will be cutting again at its September meeting."

Meanwhile, the Federal Reserve will conclude its two-day policy meeting later in the day where investors expect the U.S. central bank to lay out groundwork for a September cut.

The Bank of England's monetary policy committee will also meet on Thursday to take a call on British borrowing costs.

Spain's benchmark equity index bucked the trend, clocking a 1.2% decline.

Spain's BBVA reported a slower net profit growth in its main market in Mexico in the second quarter, overshadowing a 38% year-on-year rise in overall profit that topped market expectations. Its shares fell over 4% as the lender will not buy back more shares until its offer for rival Sabadell finishes.

Amongst other headlining stocks, French office services and call centre company Teleperformance added 10.4% after strong first-half results that revealed improving business trends, and confirmed full-year guidance indicating the pursuit of shareholder returns.

Schneider Electric rose 3.1% after the French group reported better-than-expected first-half earnings and raised its outlook.

(Reporting by Pranav Kashyap and Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips, Alexandra Hudson)

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