- Unilever shines as Q2 sales beat estimates
- Miners jump as metal prices rally on China stimulus
- Dassault System slides as quarterly results
July 25 (Reuters) - European shares edged higher on Tuesday with miners and luxury stocks in the lead after China pledged more support for its slowing economy, but mixed earnings reports limited further upside in markets.
The pan-European STOXX 600 index rose 0.2% after Asian stocks rallied on signs of more stimulus in China that would focus on boosting domestic demand.
Miners jumped 3.4% to lead gains in Europe as metal prices climbed on hopes of improving demand from top consumer China.
Luxury stocks such as LVMH and Richemont, which are heavily exposed to China, rose about 1% each.
However, a cautious mood prevailed in global markets as investors awaited monetary policy decisions from the Federal Reserve and the European Central Bank later this week, with both the banks expected to deliver 25 basis points rate hike each.
While traders are mostly betting it will be the Fed's last hike in this cycle, they are less certain about the outlook for euro zone interest rates.
A day after poor business activity readings on the euro zone, a survey showed German business morale clouded over in July for the third month in a row.
"We predict the eurozone economy will be in recession through this year," Commonwealth Bank of Australia strategists wrote in a note.
"Despite the weak PMI readings, the ECB will likely press ahead with a 25bp hike this week. Markets have however pulled back pricing for a second 25bp hike."
European stocks are trading at five-week highs as signs of resilience in the U.S. economy and hopes of the Fed pausing its rate hikes offset concerns about the earnings season as well as slowing euro zone economy.
Analysts expected second-quarter profit at STOXX 600 companies to have contracted by 9.2%, as per Refintiv IBES estimates, worse than the 4.1% decline forecast at the start of second quarter.
Unilever climbed 5.1% after the consumer giant reported better-than-expected underlying quarterly sales growth as it again raised prices to make up for higher costs.
Adidas gained 4.9% as the sportswear giant forecast smaller operating loss this year, helped by unexpectedly strong sales of Yeezy shoes left over from its abandoned collaboration with rapper Ye.
French software provider Dassault Systemes slid 4.2% after analysts said full-year targets were "difficult" to achieve after it reported a 5% rise in second-quarter revenue.
Reporting by Sruthi Shankar in Bengaluru; Editing by Varun H K
Source: Reuters