Europe open: Shares surge on BP profits, Ocado South Korea deal

European shares surged at the open on Tuesday driven by gushing oil profits at BP and Saudi giant Aramco.

The pan-European STOXX 600 index jumped 1.2% at 0836 GMT, with Britain’s oil-stock dominated FTSE 100 up 1.42%.

BP reported an estimate-busting third-quarter profit of $8.15bn and also announced another $2.5bn in share buybacks. Sentiment was also boosted as state oil giant Saudi Aramco reported a 39% rise in net income for the third quarter year-on-year, on the back of higher crude prices.

Net income rose to $42.4bn from $30.4bn a year earlier. Free cash flow soared to a record $45bn from $28.7bn.

Despite the profit bonanza, BP shares were down almost 1% in early trade. The UK government has already imposed a windfall tax on energy companies, but with a £40bn hole in state finances caused by the Conservative’s disastrous mini-budget, calls are increasing for the levy to be extended.

Investors are also eyeing the US Federal Reserve's two-day policy meeting, and expect a 75-basis-point increase in interest rates on Wednesday. The Bank of England is also expected to lift its benchmark this week.

Business surveys in Asia showed that the region's factory output weakened in October as global recession fears and China's zero-Covid policy hurt demand, while the Reserve Bank of Australia stuck implemented an expected 25 basis points rate hike and revised up its inflation outlook.

In equity news, Ocado shares delivered a 22% rise after the Grocery technology firm struck a partnership with South Korean business conglomerate Lotte Shopping to develop the latter's online offering.

The sentiment spilled over into the food delivery sector, with Just Eat Takeaway and Delivery Hero also making strong gains.

Reporting by Frank Prenesti for Sharecast.com