LONDON (Reuters) - European shares recovered on Wednesday from their biggest one-day loss in five months, as a rebound in banking stocks and some positive first-quarter results outweighed weakness in oil and gas stocks.
The pan-European STOXX 600 was up 0.2 percent at its close, after hitting a three-week low on Tuesday.
Britain's FTSE .FTSE extended the previous session's losses, dropping 0.1 percent and giving up its year-to-date gains as sterling strength weighed on its constituents, most of which are major exporters after UK Prime Minister Theresa May called for a snap general election.
“While the headline level of the FTSE 100 Index often falls when sterling strengthens, it is important to look at the performance of the index’s underlying constituent companies; those with domestic earnings and foreign costs have generally benefited materially,” Edward Park, investment committee director at Brooks Macdonald asset management, said.
Banking stocks .SX7P snapped a six-day losing streak - their longest run of daily losses for 11 months - to rise 1.8 percent, making them the top sectoral gainers.
Banco Popular POP.MC and UniCredit (CRDI.MI) were among top gainers, adding 5.5 percent and 6.1 percent respectively.
Sentiment was helped by Jefferies initiating coverage on Dutch bank ING Group (INGA.AS) with a “buy”, saying ING shares had 18.7 percent upside potential. ING rose 3.8 percent.
Basic resources .SXPP also bounced back, gaining 0.8 percent, while oil and gas stocks fell 0.7 percent as crude prices dipped on bloated U.S. supplies.
Earnings, which began in earnest for European companies, were mixed.
Meal voucher group Edenred (EDEN.PA) was a top gainer, up 5 percent after it posted higher first-quarter revenue growth and maintained its targets, boosted by growth in Latin America.
“Overall, we are encouraged by the strong start to the year and believe it means full year forecasts are well underpinned,” Barclays analysts said.
British luxury group Burberry (BRBY.L) was among the biggest European losers, down around 8 percent after it reported a slowdown in its fourth-quarter comparable sales growth rate, saying tough conditions in the U.S. outweighed an “exceptional” performance in its home market.
German retailer Zalando (ZALG.DE) fell 4.8 percent after it said it was happy with its first-quarter despite margin pressure due to post-Christmas sales discounting.
The Italian broadcaster reversed losses to end 1.6 percent higher, while Telecom Italia also ended up 1.4 percent.
“Vivendi is very unlikely to sell down its 23.9 percent TI stake, in our view,” Jefferies analysts said.
Shares in British engineering group Cobham (COB.L) fell 8.7 percent after 683 million new shares were added to trading in its rights issue, raising 512.4 million pounds.
Editing by Louise Ireland and Pritha Sarkar