European shares gain as attention moves to earnings

European stocks traded higher on Tuesday, with the STOXX 50 rising 0.5% and the STOXX 600 up 0.3%, rebounding from losses in the previous session as investor focus shifted to corporate earnings and signs of easing global trade tensions.

Optimism was fueled by solid earnings updates from several blue-chip firms, while markets also took comfort in improved forward guidance from key European industrials and consumer firms.

Philips led the gains, jumping around 10% after raising its full-year guidance on the back of stronger-than-expected demand for its diagnostic equipment and services.

Shares of EssilorLuxottica also climbed over 5% after the company reported a rise in first-half operating profit despite ongoing tariff-related headwinds and supply chain challenges. AstraZeneca added 0.6% following its earnings release, with investors welcoming a robust pipeline update and improved full-year guidance.

Barclays posted better-than-expected profits and announced a £1 billion share buyback, though its shares edged 0.2% lower, as investors digested mixed performance across business units.

Elsewhere, L'Oréal hovered near the flatline ahead of its quarterly results, due later in the day, with analysts watching closely for clues on demand trends in China and North America. Meanwhile, the auto sector was mixed, with traders continuing to assess the implications of the US-EU trade deal reached over the weekend.

Mercedes-Benz and BMW both were up nearly 0.3%, supported by improved export prospects under the revised tariff framework, while Volkswagen declined 0.7% amid lingering concerns over production bottlenecks. Stellantis was among the worst performers, sinking 2.9% after reporting a first-half net loss of €2.3 billion, driven by restructuring costs and weaker-than-expected demand in South America.

Looking ahead, investor attention is turning to the upcoming European Central Bank meeting later this week and a slew of key macroeconomic data, including eurozone inflation and GDP figures, which could shape the policy outlook and influence market sentiment in the coming sessions.