European stocks rise on solid retail earnings, commodity jump

European stock markets gained on Friday on rosy earnings forecasts from retailers Pandora and Zalando as well as drugmaker Novo Nordisk, with investors keeping an eye out for signs of fresh US stimulus.

The STOXX 600 index rose 0.4pc, led by miners and oil companies as commodity prices rose.

The European equities benchmark was on course to record its second straight week of gains as a string of mergers and acquisitions as well as a recovery in beaten-down sectors like banks and energy lifted regional markets.

Gains, however, were capped by concerns around rising coronavirus cases across the continent.

"Overall, there is a risk that market sentiment could easily turn sour in the short-term given the uncertainty related to the US election and Brexit as well as rising COVID-19 cases and fears of broader lockdowns," analysts at Unicredit wrote in a note.

The Spanish government said Madrid, one of Europe's worst virus hotspot, must enforce travel restrictions or it will impose a state of emergency. France's new daily COVID-19 infections remained above the record 18,000 threshold for the second day, while UK's health minister Matt Hancock warned the country was at a "perilous moment" as more than 17,540 new COVID-19 cases were recorded.

Globally, investors are now closely tracking the political events in the United States - a presidential election that is less than a month away and signs of progress on new fiscal stimulus.

President Donald Trump on Thursday raised hopes that Congress could reach a deal, particularly for battered sectors such as airlines. Sentiment was supported by upbeat earnings outlook. Danish jewelry maker Pandora jumped 14pc and German online fashion company Zalando rose 4.4pc after raising their outlook for 2020 on the back of a strong third quarter.

Danish pharma company Novo Nordisk gained 3.3pc after it raised its 2020 sales and operating outlook.

Cruise operator Carnival gained 3.7pc after it reported a smaller-than-expected quarterly loss and said advanced bookings for next year were improving. Broadly, companies on the STOXX 600 are expected to post a profit decline of 38pc in third quarter and 22.7pc in the current quarter, according to Refinitiv data, as businesses recoup from a coronavirus-driven hit.

Euronext slipped 2pc after hitting a record high last week.

London Stock Exchange accepted a 4.325 billion euro ($5.09 billion) cash offer from the pan-European bourse operator for the Milan stock exchange.