European stocks flat ahead of ECB meet; earnings a mixed bag

European shares closed at a two-week high on Wednesday as a slide in commodity stocks offset gains for chip and car makers ahead of a hotly-anticipated European Central Bank meeting.

The pan-European STOXX 600 index closed up barely 0.05%. Britain's FTSE 100 underperformed with a 0.7% loss as miners slid on the back of falling iron ore prices in China.

Euro zone stocks, however, added 0.2% as optimism over US-China talks helped trade-sensitive sectors including autos and technology, adding to upbeat results from chip bellwether Texas Instruments overnight.

European chipmakers ASM International, Infineon Technologies and Siltronic gained between 2.3% and 6.5%.

Daimler AG gained 2.5% after saying it would intensify cost cuts after swinging to a quarterly loss.

Traders maintain that the next major move for the market may hinge on how strong a signal the ECB sends on Thursday about support for growth, and the US Federal Reserve's response a week later.

"There is a feeling in this market that everything hangs on the central banks and they have to satisfy markets," said Craig Erlam, senior market analyst at Oanda in London.

"If you look at earnings, it's not that we are looking for companies to excel. Small beats and misses won't be latched onto as much as they would be, if everything wasn't hanging on the central banks right now."

SHAKY

Stocks have been shakier in July since recovering from a strong selloff in May that was the worst in more than two years.

Investors have lowered forecasts for corporate earnings and the latest batch of results accompanied purchasing manager (PMI) surveys that showed euro zone business growth was weaker than expected in July and would get worse.

Banks were among the hardest hit, falling 0.7%, as euro zone government bond yields slid after the weak data, which lifted bets the ECB would have to point strongly to policy loosening - or even deliver some.

Money markets are now pricing in around a 53% chance of a 10-basis-point rate cut by the ECB, with a cut fully priced in for September.

Shares in Deutsche Bank, in the midst of sweeping changes to reboot its business, fell nearly 2% after it reported a bigger than expected loss. Those in Britain's luxury car maker Aston sank 26% after it cut its annual forecast for wholesale sales.

Commodities-linked stocks slid 1.3%, with a fall in iron ore prices and a Liberium downgrade on miners taking shares of Rio Tinto down nearly 5%.

That offset gains for Broadcaster ITV, up 6.8% after it said a strong contribution to online revenue from reality show "Love Island" helped limit a decline in first-half ad revenue.

Finland's Valmet extended losses for a second day, falling nearly 8% to the bottom of STOXX 600 after the industrial machinery and equipment maker reported quarterly results below estimates.