Investing.com -- European earnings season is due to begin in earnest on July 17, with the release of results from chipmaking equipment group ASML (AS:ASML), according to analysts at UBS.
In a note to clients this week previewing the latest quarterly returns from the region, analysts added that expectations have mostly been rising in recent months following a host of surprisingly strong estimates in the first quarter.
The upbeat sentiment has also been bolstered by improving business activity, which itself has been fueled by the European Central Bank beginning to slash interest rates.
The confidence is most apparent in the services sector, which have helped to offset weakness in the manufacturing industry, analysts noted.
"There are still some striking divergences in the sectors that are forecast to grow (healthcare equipment, retail, cap goods, construction materials and insurance), versus those that are contracting (transportation, semis, software, mining and autos)," analysts said.
They said the second-quarter earnings will also serve an important marker of the progress European companies have made toward their longer-term targets.
Any statements on the broader outlook have become "critical" as well, analysts argued, particularly as many of these businesses have reach the halfway points of the fiscal years.