MILAN (Reuters) - European shares were little changed on Thursday as gains in financial stocks and a weaker euro provided support, while fashion group H&M (HMb.ST) fell after disappointing results.
The heavyweight banking sector .SX7P rose 0.5 percent to seven-week highs, buoyed by expectations monetary policy would tighten after hawkish remarks from Federal Reserve Chair Janet Yellen earlier this week.
By 0800 GMT the pan-European STOXX 600 index was down 0.1 percent, to just below the two-month high it reached in the previous session in anticipation of U.S. President Donald Trump’s tax overhaul proposal.
Germany's export-oriented DAX index .GDAXI and France's CAC .FCHI outperformed, trading up 0.2 percent and flat respectively. Spain's IBEX .IBEX added 0.1 percent as worries over the Catalonia independence referendum eased.
The U.S. tax plan, the country’s biggest in three decades, and growing expectations of a Fed rate hike in December boosted the dollar, keeping the euro at distance from the 20-month highs hit this summer .
“The DAX and CAC benefit from a softer euro and the capital outflows from the sovereign bond market,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
Investors continue to highlight the attractive relative valuations of European stocks. According to I/B/E/S data based on the MSCI Europe index, company earnings are expected to rise 13.6 percent in the third quarter, more than twice the 6.2 percent seen for the S&P 500.
H&M, however, delivered a disappointing update, making its stock the biggest loser on the STOXX, down more than 5 percent.
The Swedish company reported a 20 percent fall in quarterly profit on Thursday as summer discounts hurt margins, while sales slowed toward the end of this month.
The world’s second-biggest fashion retailer after Zara owner Inditex (ITX.MC) has been struggling to keep up with rapid changes to its retail market as competition intensifies and young shoppers move online. Inditex was down 0.5 percent.
A strong update lifted shares in food company SSP Group (SSPG.L), up 3.4 percent.
The top gainer in Europe was the British infrastructure company Balfour Beatty (BALF.L), up 5.5 percent following an upbeat note from Peel Hunt, which upgraded the stock to “buy”.
Peel Hunt said the “hidden value” within infrastructure investments and strengthening balance sheet suggested there was scope for bigger shareholder returns over the medium term.
Reporting by Danilo Masoni, editing by Larry King