European shares muted on auto pressure, set for weekly loss

By Paolo Laudani and Ankika Biswas

(Reuters) -Europe's main stock index swung between losses and gains on Friday, and was set for a weekly fall, with a handful of weak corporate earnings from auto-related companies such as Mercedes-Benz and Valeo and appliances-maker Electrolux denting investor sentiment.

The pan-European STOXX 600 was up 0.01% as of 0913 GMT, on track for its first weekly loss in three, with real estate stocks among the worst-hit sectors for the week.

Auto stocks shed 0.9% on the day, as Germany's Mercedes-Benz fell 3.7% after third-quarter earnings in core car division missed estimates by a wide margin.

Valeo added to the sector's woes, shedding 7.5% as the automotive supplier cut its annual sales guidance for the second time this year.

Electrolux slumped 15% after missing third-quarter earnings expectations on continuing U.S. losses and rising competition from China.

French spirits-maker Remy Cointreau shed 1% after dropping its forecast that its full-year sales would gradually recover after quarterly sales fell more than expected.

On the other hand, British lender NatWest climbed 4.5% after raising its income forecast for 2024, helping the banks index top sectoral gainers.

"Expectations were pretty low going into the earnings season, but the vibe we're getting from these earnings is that the economy is weakening," said Daniela Hathorn, senior market analyst at Capital.com.

"But companies' profitability is holding up pretty well, which is setting the mood for investors (and for the STOXX 600 to) comfortably hold around current levels."

Of the STOXX 600 companies that have reported third-quarter earnings, 35.3% beat estimates versus the typical beat rate of 54%, LSEG data showed earlier this week.

Equities have struggled of late, with the STOXX 600 losing momentum after hitting record highs multiple times this year, as investors navigate corporate earnings, the global rate-cut trajectory and the upcoming U.S. elections.

A survey showed German business morale improved more than expected in October, offering hope for some respite towards the year-end as the economy battles with industrial woes and weak global demand.

Meanwhile, three European Central Bank officials on Thursday tried to cool speculation on bigger rate cuts, urging the ECB to proceed gradually or at least keep its options open.

Among other earnings, lights-maker Signify jumped 8% and topped the STOXX as a largely in-line quarterly report and expectations of cost-cutting measures provided relief.

Hexagon was up 6% after the Swedish industrial technology group said it is mulling a spin-off of its Asset Lifecycle Intelligence business.

(Reporting by Paolo Laudani in Gdansk and Ankika Biswas in Bengaluru; Editing by Varun H K and Mrigank Dhaniwala)