(Reuters) – A surge in BP shares after it laid out plans to cut its oil and gas output and boost investments in renewable energy offset disappointing earnings reports including from spirits maker Diageo, although European stocks closed largely flat.
After sliding as much as 0.6%, the pan-European STOXX 600 index <.STOXX> recouped some of the losses in late afternoon trading to close 0.1% lower.
BP <BP.L> rose 6.5% even as it cut its dividend for the first time in a decade and recorded a $6.7 billion quarterly loss.
The broader oil & gas sector <.SXEP> rose 2.5%, with other growth-linked cyclical sectors such as automakers <.SXAP> and banks <.SX7P> also rising.
By contrast, Johnnie Walker whisky maker Diageo’s <DGE.L> shares slid 5.6% after it reported a bigger-than-expected decline in underlying sales in nearly all markets.
German drugs and pesticides group Bayer <BAYGn.DE> slipped 2.4% as moves to settle lawsuits over its Roundup weedkiller contributed to a 9.5 billion euro ($11.2 billion) loss.
Of the 223 companies listed on the STOXX 600 that have reported so far, nearly 62% have topped analysts’ much-reduced expectations for profits, according to Refinitiv data. In a typical quarter, 50% beat earnings estimate.
“Overall, the decline (in earnings) isn’t quite as large as people had feared. However, that is not feeding through into people upgrading their estimates for the rest of the year,” said Matt Siddle, portfolio manager, Fidelity Funds European Growth.
“The rate of how rapidly sales were recovering in June – because that was a much better guide for what will happen in the second half of the year – has not tended to give enough confidence to upgrade.”
After a recovery from March lows that has seen the STOXX 600 climb nearly 36%, markets have wobbled in recent weeks on concerns about a resurgence in coronavirus cases.
Doubts over the progress of a U.S. coronavirus aid package and a diplomatic tussle over Chinese tech companies’ operations in the United States also kept investors on edge.
Banking-heavy Italian <.FTMIB> and Spanish <.IBEX> indexes were both higher, as data showed Italy standing out as the main beneficiary of the European Central Bank’s efforts to support a virus-stricken euro zone economy.
Intesa Sanpaolo <ISP.MI>, which just sealed a takeover of smaller rival UBI <UBI.MI>, gained 5.0% after saying it would seek clearance to return more cash to shareholders.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Rashmi Aich, Patrick Graham and Alexander Smith)