By Kit Rees

By Kit Rees

 

LONDON (Reuters) - Strength among commodity firms and banking stocks as well as a string of solid updates boosted European shares in early deals on Tuesday.

 

Earnings season remains front and center for equities investors though the focus will also be on the two-day U.S. Federal Reserve meeting which gets under way later in the day.

 

Expectations are for the Fed to wait for the fourth quarter before raising rates, as U.S. economic data has been weaker than expected.

 

The pan-European STOXX 600 <.STOXX> index rose 0.5 percent, bolstered by strength in mining firms <.SXPP> and banks <.SX7P> while blue chips <.STOXX50E> gained 0.6 percent.

"We're at that difficult junction in the middle of the year where we've rallied, we've done well, (we're) starting to accept that central banks are normalizing more, but we haven't actually seen much more," Mike van Dulken, head of research at Accendo Markets, said.

"So are people starting to question the macro environment a bit more than they were?" van Dulken added.

Corporate results season gathered steam with British business media group Informa <INF.L> and Dutch staffing firm Randstad <RAND.AS> leading STOXX risers after well-received first-half updates, both gaining more than 6.5 percent.

Europe's tech sector <.SX8P> was also helped by iPhone supplier AMS <AMS.S>, which rose after hiking its mid-term revenue target, while computer peripherals and mobile speaker maker Logitech <LOGN.S> also raised its outlook.

Dutch paints maker Akzo Nobel <AKZO.AS> was one of the biggest individual drags on the STOXX, however, falling 1.3 percent after its second quarter profit missed forecasts.

Analysts at UBS highlighted weakness in Akzo Nobel's Performance Coatings division, adding that they were expecting investors to focus on near-term pressures facing the stock.

Updates also weighed on paper maker UPM <UPM.HE>, Cembra Money Bank <CMBN.S> and Domino's Pizza <DOM.L>, which all fell between 4.4 percent to 7.6 percent.

While it is still early days for the European second quarter earnings season as only 20 percent of firms have given updates, more than half of those firms have beaten analysts' expectations, according to Thomson Reuters data.

The Paris-listed shares of TechnipFMC <FTI.PA> were the biggest fallers, slumping around 7.5 percent after the oil services firm said that it had overstated its first-quarter earnings.

European deal-making also rolled on with U.S. retailer Michael Kors <KORS.N> agreeing to buy luxury shoemaker Jimmy Choo <CHOO.L> for $1.2 billion, sending Jimmy Choo's shares up 17 percent to an all-time high.

(Reporting by Kit Rees; Editing by Helen Reid and Alison Williams)