European stocks close higher on earnings, dovish ECB; IBEX falls on Catalonia news

Key Points
  • Earnings season continues to be in full swing, with many firms posting their latest figures
  • The ECB said Thursday it would cut back with its scheme designed to boost the economies in the euro zone
  • The regional parliament of Catalonia declared independence from Spain on Friday

European stocks closed higher Friday, as investors tried to shake off political turbulence in the region and focus on upbeat earnings and the prospect of continuing stimulus in Europe.

The pan-European Stoxx 600 closed provisionally higher, with most sectors and major bourses in positive territory.

The French CAC touched its highest level in almost a decade on Friday, while Germany's Dax set a fresh record high after dovish comments from ECB President Mario Draghi in the previous session. A sharp uptick in auto stocks also boosted the DAX, with Volkswagen posting a positive earnings report.

However, all was not well in peripheral markets. Spain's IBEX 35 tumbled more than 1 percent after news emerged that the regional parliament of Catalonia had declared independence from Spain on Friday afternoon. Spanish banking stocks came under pressure, with Banco de Sabadell and Caixabank both in the red.

Satellite firms suffer, while Kindred Group jumps 12%

Europe's autos and technology sectors were among the the best performers, both up more than 1 percent each on well-received earnings news. Looking at individual stocks, Gemalto soared near to the top of the benchmark, up more than 8 percent. The Dutch digital security firm was poised for its best trading day in almost a decade after it reported third-quarter earnings in line with expectations.

Global growth environment ‘quite benign,’ analyst says

The Royal Bank of Scotland rose more than 1 percent after it posted a better-than-anticipated operating profit for the third quarter. However Europe's best performer was Kindred Group, which rose almost 12 percent after third quarter pretax profit beat forecasts.

Meantime, SES tumbled to the bottom of the index after its earnings missed forecasts. The Luxembourg-based satellite company posted lower-than-expected third-quarter figures amid weakness in its video and data operations. Its shares were almost 15 percent lower, pushing shares to an eight-year low.

French competitor Eutelsat sank more than 9 percent, after it said in its latest earnings report that it would be adjusting its full-year revenue expectations for 2017-2018 "from 'broadly stable' to between -1 and -2 percent".

Oil and gas became the second best performing sector as trading came to a close, up 1.35 percent. Brent crude smashed through $60 a barrel, for the first time since July 2015. Energy firm Neste climbed to the top of the sector, after an Inderes analyst raised the stock to "increase" from "reduce". Shares of the company were up more than 5 percent.

ECB to halve bond-buying program

Looking to the central bank space, the European Central Bank said Thursday it would cut back with its scheme designed to boost the economies in the euro zone.

From January 2018, the ECB is poised to reduce the amount of bonds it purchases every month to 30 billion euros ($35 billion) from the current level of 60 billion euros. The central bank also said it would until at least September next year.

Meanwhile in the U.S., President Donald Trump is said to be getting closer to naming the next Federal Reserve chair. Sources told CNBC that Trump is leaning towards Fed Governor Jerome "Jay" Powell. For weeks, the former investment banker has been considered as most likely to be picked for the role.

U.S. tech stocks surged as Wall Street cheered the blowout quarterly reports from Amazon, Alphabet and Microsoft.

How the ECB is impacting business and consumer sentiment in Europe