Europe open: Stocks bounce back amid earnings avalanche

European stocks rose in early trade, bouncing back from heavy losses in the previous session following a late rebound on Wall Street as investors sifted through a deluge of earnings.

At 0855 GMT, the benchmark Stoxx Europe 600 index was up 1.5%, Germany’s DAX was up 0.9% and France’s CAC 40 was 1.6% higher,

“European bourses are taking their lead from the late rally on Wall St shrugging off the slump in Chinese stocks overnight ahead of the G20 meeting in Shanghai,” said Andy McLevey, head of dealing at stockbroker Interactive Investor.

However, SpreadCo analyst David Morrison said it was doubtful European indices could hold on to early gains as crude oil prices slip and following the selloff in China, where the Shanghai Composite slumped 6.4%.

He said investors would be looking to the G20 meeting in Shanghai, “amid fears that China is preparing to devalue the yuan”.

"Despite this, there are (forlorn) hopes there will be some form of coordinated response to counter the headwinds facing the global economy. However, experience tells us that policymakers respond to events rather than acting ahead of them.”

Oil prices were back under pressure again amid ongoing concerns about oversupply, with West Texas Intermediate down 1.6% to $31.63 a barrel and Brent crude down 1.7% to $33.83. On Wednesday, data from the US Department of Energy showed crude stockpiles rose 3.5m barrels last week to an all-time peak above 507m.

In corporate news, Technip pushed higher after the French oil services group maintained its dividend and released better-than-expected revenue for the fourth quarter of 2015.

Insurer AXA was firmer after posting a 12% gain in 2015 profit, while Lloyds Banking Group surged after it hiked its dividend, although its pre-tax profit for the year was hit by more PPI charges.

RSA Insurance rocketed after its operating profit for 2015 beat analysts’ expectations, and BT Group rallied despite regulator Ofcom saying it may still need to spin off its Openreach infrastructure arm, unless it effectively opens up the network to rivals and implements major reforms.

On the downside, Repsol was in the red after posting a 25% rise in fourth quarter profit, while German consumer goods company Henkel was under the cosh despite reporting a jump in fourth quarter profit.

Brewer Anheuser Busch InBev was weaker after its fourth quarter numbers missed expectations.

British American Tobacco was also on the back foot after saying full year profit rose but revenue fell.

Zodiac Aerospace, which makes seats for airplane manufacturers, tumbled, as it announced that its restructuring plan will take longer than thought and the company will not meet its profit margin goal.

On the data front, Eurozone inflation figures are at 1000 GMT. In the US, initial jobless claims and durable goods orders are at 1330 GMT, while FHFA home prices are at 1400 GMT.