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UPDATE 2-Solid earnings keep European shares at highs

Published 28/07/2018, 02:12 am
© Reuters.  UPDATE 2-Solid earnings keep European shares at highs
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* STOXX 600 up 0.4 pct at close

* Renault , Reckitt gain after updates

* BHP rises after shale deal (Adds detail, updates prices at close)

By Danilo Masoni

MILAN, July 27 (Reuters) - European stocks rose to fresh six-week highs on Friday, helped by an easing of fears over U.S tariffs and some solid company results.

Shares in consumer goods company Reckitt Benckiser RB.L , supermarket retailer Carrefour CARR.PA , construction group Vinci SGEF.PA , BT BT.L and bank BBVA BBVA.MC rose following well-received results, lifting the pan-European STOXX 600 .STOXX benchmark, closing 0.6 percent higher.

"On average earnings updates are quite good," said Jerome Schupp, fund manager at Geneva-based investment firm Prime Partners. "The message about the second half is also reassuring given the uncertainties regarding trade wars."

According to Deutsche Bank (DE:DBKGn), European second-quarter EPS growth has accelerated to six percent from 0 percent in the first, a result they said was good given the deterioration in euro area growth momentum.

Hopes of a breakthrough in U.S.-EU trade talks lifted the STOXX to its highest level since mid-June on Thursday as carmakers .SXAP , which rely on exports for growth, rose sharply. The index ended the week up 1.7 percent.

Investors however kept a degree of caution.

The U.S. Commerce Department will continue its probe into whether auto imports pose a national security risk despite ongoing trade talks with the EU, but U.S. President Donald Trump asked that no action be taken at this time, Commerce Secretary Wilbur Ross said on Thursday. declined 0.2 percent on Friday.

Renault RENA.PA rose nearly two percent after a volatile start as the French carmaker achieved record profitability in the first half as emerging market sales surged.

"Results came in line with a modest headline beat and better net liquidity but details of margin development and capital intensity are mixed and likely to keep pressure on margins," Jefferies analysts said in a note.

Shares in German carmakers BMW BMWG.DE and Daimler DAIGn.DE , which are heavily exposed to the U.S. market, slipped slightly.

Mining company BHP Billiton BLT.L rose three percent after BP BP.L agreed to buy its U.S. shale oil and gas assets for $10.5 billion. BP shares reversed earlier losses to end 0.5 percent higher.

"The shale deal presents a promising opportunity for BP to reverse many years of underinvestment," said Accendo Markets Artjom analyst Artjom Hatsaturjants.

"Still, it comes at a price of a short-term hit to shareholder value and would divide those investors looking for a quick profit from rising oil prices and those who see a long-term opportunity in holding energy stocks," he added.

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