European shares hit 3-week high on earnings boost

By Ankika Biswas and Bansari Mayur Kamdar

(Reuters) -European shares rose on Thursday, boosted by AstraZeneca and Adyen on strong earnings, while markets awaited the Federal Reserve Chair's remarks on the monetary policy outlook after European Central Bank officials played down market bets around rate cuts.

The pan-European STOXX 600 closed 0.8% higher at its highest level since Oct. 18.

Markets are once again bracing for Powell's remarks, scheduled for 1900 GMT, a day after he refrained from commenting on interest rates.

"Powell is quite comfortable with the message already sent- rate-hiking cycle has likely come to an end but that talk of cuts is premature," said Stuart Cole, head macro economist at Equiti Capital.

ECB policymakers on Wednesday said further progress is needed to tame inflation, while Vice President Luis de Guindos in an interview on Thursday said it is premature to discuss rate cuts amid lingering risks to the inflation outlook.

Bank of England Chief Economist Huw Pill also noted the central bank needed to maintain a restrictive stance for monetary policy, a day after Governor Andrew Bailey pushed back against discussions on rate cuts.

"One clear take-away is that nothing is expected until at least the middle of next year; the question is whether it will come late H1/early H2, or late H2," Equiti's Cole said.

Earnings continued to drive strong share movements. LSEG data on Tuesday showed the STOXX 600 companies that have reported third-quarter results so far, 55.3% topped earnings expectations, slightly above the typical rate of 54%.

Adyen surged 37.8% to top the STOXX 600 after the digital payments processor posted "better-than-feared" third-quarter sales with "more realistic" mid-term targets.

Drugmaker AstraZeneca gained 2.6% to a near three-week high after raising its annual earnings forecast and reporting better-than-expected third-quarter profit and revenue.

Schneider Electric SE jumped 8.3% after its medium and long-term outlook announcement, while German consumer goods company Henkel rose 4.5% after slightly raising its full-year guidance.

Meanwhile, Novo Nordisk fell 2.8% after regulators gave a thumbs up to Eli Lilly's weight-loss treatment Zepbound, paving the way for a powerful new rival to the Danish drugmaker's Wegovy.

Flutter dropped 10.2% to its lowest level since January as the world's largest online betting company expects full-year earnings to be at the bottom of its previously forecast range, steering a 2.0% slide in the travel and leisure sector.

Coloplast slid 6.9% after the Danish medical equipment maker reported fourth-quarter sales below expectations.

(Reporting by Ankika Biswas and Bansari Mayur Kamdar in Bengaluru; Editing by Nivedita Bhattacharjee, Sonia Cheema and David Evans)