European shares edge higher, buoyed by financials

By Johann M Cherian

Feb 16 (Reuters) – The STOXX 600 index edged higher on Monday, aided by gains in financial stocks ahead of data on industrial production, while investors geared up for fresh earnings releases later this ​week that could offer clues into the health of corporate Europe.

The pan-European ‌index edged up 0.2% to 618.91 points by 0844 GMT, with the banks-heavy Spain’s benchmark leading gains among regional markets.

European shares hit a volatile patch in late January and through early February on worries that newer artificial intelligence tools could squeeze profits of traditional businesses.

However, a better-than-feared earnings season in ‌the ​face of steep U.S. tariffs helped the STOXX index ⁠touch a record high last ⁠week and log its third-straight week of gains.

Banks and insurance stocks had been mired in AI-disruption worries last week, with the lending index logging its biggest one-week drop since late-March 2025. On Monday, lenders bounced back with a 1.7% rise, ​while insurance stocks added 1%.

“The real challenge is that even by the end of this year we still won’t have enough evidence to identify the structural winners ⁠and losers with confidence. That leaves plenty of ⁠room for investors’ imaginations—both optimistic and pessimistic—to run wild. As such ​big sentiment swings will continue to be the order of the day,” a group ​of analysts led by Deutsche Bank’s Jim Reid said in a note.

No ‌major earnings releases are expected on Monday, but those from Orange, Zealand Pharma, Airbus and BE Semiconductor are due later this week.

So far, 60% of European companies have beaten earnings expectations, compared with 54% seen in a typical quarter, according to data compiled ⁠by LSEG. Further, earnings are expected to have fallen 1.1%, versus about a 4% drop earlier in the month.

On the data front, a report later in the day is expected ⁠to show euro zone ‌industrial production increased 1.3% year-on-year in December, compared with a ⁠2.5% rise a month earlier, at a time when investors are ​anticipating ‌that fiscal stimulus is reviving the sector.

Among others, Orsted gained ​2.7% after brokerage ⁠Kepler Cheuvreux raised the Danish offshore wind developer to “buy” from “hold”.

Norsk Hydro lost 3.4% after the brokerage downgraded the aluminium producer to “reduce” from “hold”. The broader basic resources index slipped 1.3%.

Baby formula makers such as Nestle and Danone were marginally lower after the Paris public prosecutor opened five investigations over contamination with toxin cereulide.

(Reporting by Johann M Cherian in Bengaluru; ​Editing by Mrigank Dhaniwala)