Europe open: Stocks up but gains limited by Middle East conflict

(Sharecast News) - European stocks rose for a second straight day as markets headed into the new corporate earnings season in an optimistic mood, though gains were limited by the ongoing conflict in the Middle East. Israel's threat to launch a ground offensive is a major cause for concern for markets, on the back of fears of the conflict spreading further afield. However, diplomatic efforts from elsewhere may be helping investor sentiment, with US president Joe Biden scheduled to make a visit to the country on Wednesday.

The Stoxx 600 Index was up 0.3% at 451.42 by 0917 BST, with the FTSE rising 0.5%, the CAC 40 and FTSE MIB 0.4% higher and the DAX and IBEX 35 up 0.3%.

"The recent risk-off sentiment that had cast a shadow over the markets seems to be easing, partly due to extensive shuttle diplomacy by The Whitehouse and other regional actors," said Stephen Innes, managing parter at SPI Asset Management.

"Nevertheless, this optimism comes before Israel launches its ground offensive in Gaza, and this development could swiftly sour sentiment once more."

Meanwhile, all eyes are on the US right now as third-quarter earnings season kicks off. Last week saw results from Citigroup and JPMorgan Chase; Tuesday will see the release of earnings from corporate heavyweights Johnson & Johnson, Goldman Sachs and Bank America; while Netflix and Tesla will publish their figures on Wednesday.

The economic data calendar looks relatively light, with the German ZEW economic sentiment index due out later Tuesday morning, and US retail sales expected this afternoon.

In European company news, shares in Ericsson slumped after the Swedish telecoms group removed its guidance for 2024 owing to macro uncertainty. "Given current uncertainty we will not give guidance beyond 4Q 2023," said chief executive Borje Ekholm. "We prudently plan for current market conditions to prevail into 2024." The company expects to report an adjusted fourth-quarter EBITD margin of just 10%, well below the target range of 15-18% previously forecast for mid-2024.

Engine maker Rolls-Royce gained on the news that it will cut up to 2,500 jobs worldwide as part of a plan to streamline the organisation. Rolls-Royce said the changes being proposed will remove duplication and deliver cost efficiencies.

UK housebuilders were mostly lower after Bellway reported an 18% slump in full-year profits and gave a gloomy outlook, causing shares of peers Barratt Developments and Taylor Wimpey to fall.