October 20, 2017 / 7:28 AM / in a year

Ericsson, Volvo lead European stocks in earnings driven session

LONDON (Reuters) - Ericsson and Volvo led European shares higher on Friday with well-received earnings reports during a session where financials and tech stocks also outperformed.

The German share price index, DAX board, is seen at the stock exchange in Frankfurt, Germany, October 17, 2017. REUTERS/Staff/Remote

The pan-European STOXX 600 was up 0.2 percent with most European bourses ending the day in positive territory.

Mobile network gear maker Ericsson (ERICb.ST) soared 8 percent as it said it detected signs of improvement after its restructuring efforts.

Swedish truck maker Volvo (VOLVb.ST) was a close second with a 7 percent rise, hitting a record high after beating expectations.

“We’ve had very strong results from Volvo. The main reason for that was from construction and I would say that’s a leading economic indicator, so seeing such strength is very supportive for Europe”, said Rachel Winter, senior investment manager for Killik & CO.

European third quarter earnings are expected to grow 4.5 percent from the same period in 2016, an increase of 1.3 percent excluding the energy sector, according to estimates from Thomson Reuters I/B/E/S.

Financials were the biggest support to the STOXX, with banks .SX7P up 1.2 percent and shares from the technology sector .SX8P rising an average of 0.6 percent.

News that the U.S. Senate passed a budget blueprint which would pave the way for tax cuts also fuelled optimism on the market and gave a boost to cyclical shares, such as chemicals .SX4P up 0.6 percent and basic materials .SXPP, which rose 0.4%.

“Maybe with tax cuts now coming back onto the path in terms of possibly coming into being, that’s an additional boost and should actually underpin markets going into the end of the year,” City Index’s analyst Ken Odeluga wrote in a note to his clients.

Additional reporting by Helen Reid,; editing by Elaine Hardcastle and Peter Graff

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