By Danilo Masoni and Kit Rees
MILAN, May 4 (Reuters
) - European shares powered ahead on Thursday as earnings, economic data and politics aligned to boost the market to further highs.
The pan-European STOXX 600 index rose 0.7 percent, holding at 20-month highs, while German blue chips soared to an all-time high and France's CAC climbed to its highest in more than nine years.
As the European earnings season nears the halfway mark, more than 80 percent of companies have beaten analyst expectations for revenues, showing that a recovery in demand is driving sales, according to Thomson Reuters
"The numbers (for Europe) are stronger than in the U.S., with the average earnings surprise standing at more than 10 percent, while sales surprises are a strong 2.4 percent," analysts at Credit Suisse said in a note.
Also supporting the region's stocks were signs that centrist Emmanuel Macron is set for victory in France's presidential election on Sunday, and a survey showing euro zone businesses started the second quarter by turning out their best performance in six years.
European banks rose 1.5 percent after lender HSBC jumped 2.9 percent, having posted a better-than-expected first-quarter profit and capital position.
"Overall we view this as a positive set of results," Gary Greenwood, analyst at Shore Capital Markets, said in a note, adding that the figures could potentially push up forecasts.
Likewise a bullish statement from the U.S. Federal Reserve after it kept interest rates on hold helped the sector, as banks benefit from a higher interest rate environment.
Oil and gas stocks slipped 0.1 percent, reversing earlier gains as crude fell to its lowest since November. Concern over rising global supply and high inventories effectively wiped out most of the gains made since OPEC announced its first supply cut in eight years.
But Statoil and Royal Dutch Shell managed to eke out small gains, both up around 0.3 percent, following robust earning updates from both.
"We have seen a sharp recovery in profits and strong cash flow from Royal Dutch Shell this quarter," said Simon Gergel, UK equities CIO at Allianz Global Investors.
"The company has generated sufficient cash to cover capital expenditure and the full cost of dividends ... This provides further reassurance about the benefits of the BG deal to the group's cash flow and the sustainability of the company's dividends."
Results also boosted shares in brewer AB InBev and Austrian engineer Andritz, Italy's Leonardo and Ferrari, which were among top gainers in Europe.
Swedish biometric firm Fingerprint Cards was the biggest STOXX faller, dropping 6.4 percent after a disappointing first quarter report. Fingerprint's operating profit slumped 88 percent, well below expectations, weighed down by excess inventories.
British retailer Next was also under pressure, down 5.1 percent after cutting the top end of its full-year profit guidance.
European mining firms fell 2.3 percent as copper, aluminium and gold prices sagged, weighing on shares of aluminium producer Norsk Hydro, Centamin and Anglo American.
(Reporting by Danilo Masoni; editing by John Stonestreet) ((Danilo.Masoni@TR.com; +39-02-66129734; Reuters
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