October 20, 2017 / 7:24 AM / a year ago

Ericsson, Volvo propel European stocks as Spain lags

LONDON, Oct 20 (Reuters) - European shares rose in early deals on Friday, recovering some losses as well-received earnings reports boosted shares in Volvo and Ericsson, though political malaise held back Spanish stocks.

The pan-European STOXX 600 was up 0.2 percent, rebounding from its lowest closing level so far in October, while euro zone blue chips gained 0.3 percent.

Spain’s benchmark IBEX was in negative territory, however, down 0.1 percent ahead of a special cabinet meeting on Saturday which could see Spain suspending Catalonia’s autonomy.

While the IBEX is still up around 9 percent so far this year, it has lagged the STOXX 600 in October, down around 1.7 percent since Catalonia’s independence referendum on Oct 1.

Elsewhere, company results were in focus, with Swedish truck maker Volvo the biggest STOXX riser, up more than 6 percent and hitting a record high after beating expectations.

Volvo was joined by Ericsson, whose shares jumped 3.6 percent after its update.

European third quarter earnings are expected to grow 4.5 percent from the same period in 2016, an increase of 1.3 percent excluding the energy sector, according to estimates from Thomson Reuters I/B/E/S.

More broadly, European financials provided the biggest support to the STOXX, with banks rallying 0.6 percent after the U.S. Senate passed a budget blueprint which will pave the way for tax cuts.

Basic resources was the top-gaining sector, rising 1 percent as a firmer copper price lifted shares in miners.

Reporting by Kit Rees

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