Europe close: Tech rally lifts markets, but HSBC weighs on FTSE

(Sharecast News) - European stock markets extended gains on Tuesday afternoon, despite weakness on London's FTSE 100, as shares in the semiconductor sector rallied ahead of some Big Tech earnings Stateside.

The pan-European Stoxx 600 was up 0.5% by the close of play, after erasing early-morning losses, with Germany's DAX gaining 0.7%, France's CAC 40 rising 0.5% and Spain's IBEX 35 advancing 0.7% and Italy's FTSE MIB up 0.9%.

The FTSE 100, however, finished 0.8% lower on the back of heavy losses from blue chips HSBC and Reckitt Benckiser.

Despite the push into positive territory, market sentiment was generally cautious ahead of interest rate decisions from the US Federal Reserve and European Central Bank on Wednesday and Thursday, respectively.

Investors were also assessing the impact of elevated energy prices - Brent crude futures were down 1.1% at $109.56 a barrel but still close to their highest since May - along with geopolitical tensions in the Middle East and a busy corporate earnings calendar.

Economic data also came in mixed, with Germany's Ifo business climate index rising to 90.2 in October from 89.9 in September, while France's consumer confidence index fell five points to 80 in October, its lowest level since June 2013.

In equity movements, HSBC reported that pre-tax profit rose to $9.63bn in the third quarter, with revenue 5% higher at $18.62bn, mainly reflecting growth in banking net interest income. Both figures, however, were just slightly below forecasts, causing the stock to drop 5% to its lowest since mid-June.

"The results extend recent share price losses for the bank, which has been hit recently by Beijing's increased scrutiny on Chinese wealth going overseas. That is a problem for HSBC given a key part of its current strategy is doubling down on its Asian focus," said Russ Mould, investment director at AJ Bell.

"HSBC is under pressure to bring costs down and while there is clear evidence of progress in the quarterly results, the market is likely to keep management's feet to the fire on this score."

Also down 5% in London was Reckitt Benckiser as the consumer goods giant cut its full-year sales growth guidance after third-quarter trading fell short of expectations, hit by manufacturing constraints in North America and weaker demand for vitamins and supplements in China.

Losses, however, were tempered by gains among technology and semiconductor stocks, led by Dutch chip equipment maker BE Semiconductor Industries after Applied Materials said it would up its stake in the company to approximately 20%.

Other semiconductor stocks also gained, with STMicroelectronics and ASM International both rising with tech investors eagerly awaiting scheduled earnings from Microsoft, Alphabet and Amazon on Wall Street.

Novartis was higher as it lifted its full-year earnings guidance after reporting higher third-quarter core operating profit, driven by strong sales of its key medicines and improved margins.

Meanwhile, Swiss packaging group SIG surged after reporting stronger third-quarter trading and raising its full-year margin guidance.