Tech stocks enjoy best day in 10 months as earnings drive European shares higher

* STOXX 600 up 0.7 pct

* ASML leads tech higher after Q2 beat

* Earnings boost Georg Fischer, Ubisoft

* Falls in NCC, Assa Abloy hold construction sector back

* Orion sinks after Q2 miss

* Reckitt rises after food business sale
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By Kit Rees and Helen Reid

LONDON, July 19 (Reuters) – A slew of upbeat updates from
European firms helped the region’s benchmark index rise on
Wednesday and recoup the previous session’s sharp losses, with
tech stocks enjoying their best day in 10 months and all sectors
making gains.

The pan-European STOXX 600 index rose 0.7 percent
while blue chips climbed 0.6 percent.

Dutch semiconductor equipment maker ASML, up 6
percent, boosted the tech sector. The firm beat second
quarter earnings estimates thanks to strong demand from
manufacturers of memory chips.

Tech stocks rose 2.2 percent in their best daily performance
since September last year, as chipmakers ASM and
STMicro followed ASML higher.

Europe’s tech sector has gained more than 14 percent so far
this year, but worries over stretched valuations, especially
among U.S. peers, have put the brakes on that rally.

On the day, however, the tech-heavy Nasdaq hitting a
fresh record high helped European tech extend gains.

Strong first-half profit growth sent shares in Georg Fischer
soaring 12.5 percent to the top of the STOXX, while
French video games maker Ubisoft jumped more than 9
percent on the back of a strong sales update.

Overall earnings in the second quarter are expected to grow
by 7.9 percent from the same period last year, which would be an
increase of 5.6 percent excluding the energy sector, according
to Thomson Reuters I/B/E/S estimates.

“We would like to see those stronger earnings coming through
and Europe really turning a corner,” said Dafydd Davies, partner
at Charles Hanover Investments.

Earnings disappointment weighed on Finnish pharmaceutical
company Orion which sank 12 percent to the bottom of
the STOXX. Its second-quarter earnings came in at 71.8 million,
missing analyst estimates.

Gains among banking stocks were reined in by
Commerzbank which fell 3.1 percent to the bottom of
the DAX after UBS cut its rating on the bank to ‘neutral’.

“Our positive outlook on Commerzbank is unchanged, but we
note that this is based on operating conditions in 2019 – and
that 2017 and even 2018 are transitional years,” said UBS

“The shares have rallied and now appear fully valued, and as
such we downgrade to neutral,” they added.

Heavy losses for builder NCC and lock maker Assa
Abloy weighed on the construction sector,
which made the most modest gains.

NCC slumped more than 9 percent after its second quarter
pretax profit came in below expectations, while Assa Abloy
dropped 8.5 percent after saying that demand in China had turned
sour again in the second quarter.

Cross-border deal-making rolled on with Reckitt Benckiser
up 1.6 percent after saying it would sell its food
business to U.S. spice and herbs co McCormick & Co Inc
for $4.2 bln.

Shares in Spanish firms Aena and Abertis
were suspended following a report that the Spanish airport
operator had studied a possible takeover offer for the highway
concessions company.
(Reporting by Kit Rees; Editing by Vikram Subhedar, Raissa
Kasolowsky and Ken Ferris)

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