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European stocks rebounded on Wednesday, helped by positive company results which saw shares in British retailer Marks & Spencer surge more than eight per cent.
However, some traders said the stock market rally could be short-lived if European Central Bank (ECB) chief Mario Draghi fails on Thursday to unveil new economic stimulus measures to spur growth in the euro zone's struggling economy.
"If we get nothing from the ECB, which is a close call, we may see some downside," Philippe Gijsels, chief strategy officer at Fortis Bank, told Reuters Insider Television.
Marks & Spencer jumped 8.2 per cent after posting a rise in underlying first-half profit for the first time in four years, beating expectations, while German chemicals distributor Brenntag gained 4.5 per cent, boosted by forecast-beating earnings.
Shares in Lundin Petroleum also advanced 2.6 per cent after the Swedish oil and gas producer posted third-quarter earnings above expectations, while German reinsurer Hannover Re rose 1.4 per cent after saying its net profit rose by a forecast-beating 21 per cent.
Bucking the trend, however, was Finnish stainless steel maker Outokumpu which slumped 8.2 per cent after reporting a bigger-than-expected quarterly loss.
About halfway into Europe's earnings season, 64 per cent of companies have managed to meet or beat profit forecasts, while 59 per cent have met or beaten revenue forecasts, according to Thomson Reuters StarMine data.
In absolute terms, profits are up 13 per cent versus the same quarter a year ago, while revenues are down 0.2 per cent, highlighting the fact that Europe's earnings rebound has mostly come from cost-cutting and lower financing costs.
The pan-European FTSEurofirst 300 blue-chip index was up by 1 per cent at 1,340.34 points by the middle of the trading session.
The index had fallen 1 per cent on Tuesday, extending losses in late trading after Reuters reported that central bankers in the euro area planned to challenge ECB chief Draghi over what they considered to be his secretive management style.
"The market is rising today, but without real conviction. There's no real trend on the market at the moment, and flows from investors remain thin," said Jean-Louis Cussac, head of Paris-based firm Perceval Finance.
