BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks closed broadly higher on Thursday even as the UK market underperformed, with investors largely reacting to corporate earnings updates, and assessing the situation in the Middle East where the conflict between Iran and the U.S. escalated, raising concerns about inflation and global economic growth.
The United States carried out fresh strikes on Iran on Wednesday, further intensifying a five-month-old war that is spreading beyond its main fronts to embroil more countries across the region.
The latest escalation came after a drone struck a U.S.-owned gas storage tanker at Egypt's Mediterranean port of Damietta and Iran fired missiles targeting U.S troops in Jordan.
Investors also digested the Bank of England and the Federal Reserve's decision to hold their interest rates. There is some uncertainty about future policy as three FOMC members reportedly dissented in favor of a rate hike.
The Bank of England has kept UK interest rates on hold as it warned that a further escalation in the Iran war could drive inflation above 4% next year, adding to cost-of-living pressures on households.
Against a volatile backdrop in the Middle East conflict, the Bank's monetary policy committee voted by six to three to keep its key base rate at the current level of 3.75%.
The pan European Stoxx 600 climbed 0.77%. Germany's DAX and France's CAC 40 gained 0.6% and 0.92%, respectively. The UK market's FTSE 100 edged down 0.1%, while Switzerland's SMI shed 0.65%.
Among other markets in Europe, Austria, Czech Republic, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Spain and Sweden closed higher.
Belgium, Iceland, Russia and Türkiye ended weak, while Denmark closed flat.
In the UK market, miners and bank stocks were among the prominent gainers.
Rolls Royce Holdings jumped 6% after the engineering company raised its full-year profit forecast after delivering strong operational and financial performance for the first half of the year.
Lloyds Banking Group gained nearly 4%. The lender revealed plans to cut costs, raised its interim dividend and announced a fresh £1bn share buyback after reporting a 23% jump in half-year profit.
Halma, Antofagasta, Lion Finance, Barclays, Glencore, Prudential, Anglo American Plc, Diploma and IMI moved up 3%-5%.
IMI, Natwest Group, Standard Chartered, HSBC Holdings, Polar Capital Technology Trust, Rio Tinto, Endeavour Mining, Standard Life and Smiths Group also posted strong gains.
Rentokil Initial tanked nearly 21% as the company issued a cautious outlook despite meeting profit expectations.
Relx, LSEG, Experian, The Sage Group, British American Tobacco, GSK, AstraZeneca, Compass Group, Imperial Brands, Haleon, Unilever, Pearson, Smith & Nephew, Games Workshop, Vodafone Group and Tesco shed 2%-7%.
In the German market, BMW gained after reporting a slightly better-than-expected profit margin from its automotive business in the second quarter.
Infineon soared more than 9%. Siemens Energy climbed 8%. Siemens, Symrise, Hochtief, Deutsche Bank, Continental, Fresenius Medical Care, Bayer, Commerzbank, RWE and Volkswagen gained 1%-4%.
Adidas dropped by about 10% after higher marketing spending for the football World Cup resulted in lower-than-expected quarterly profit.
Airbus, Rheinmetall and Deutsche Telekom also ended notably lower.
In the French market, Schneider Electric zoomed nearly 11% after reporting a 30% jump in first-half net income compared to a year ago.
Bouygues climbed more than 7% after reporting a net profit of 287 million euros for the first-half, compared to 173 million euros a year earlier.
Vinci surged 4.7%. The French infrastructure and concessions giant beat first-half profit and free cash flow estimates, driven in particular by the dynamitic trajectory of Energy Solutions.
Societe Generale and STMicroelectronics advanced 5.7% and 4%, respectively. ArcelorMittal, Hermes International, L'Oreal, Credit Agricole, Carrefour, Accor, BNP Paribas, Legrand and LVMH gained 1%-3%.
Veolia Environment, a global leader in environmental services, after delivering solid first-half results and raising its full-year profit outlook.
Stellantis declined sharply after second quarter operating adjusted operating income came in below estimates.
Sanofi, Capgemini, Bureau Veritas, Dassault Systemes, Teleperformance, Danone, Airbus, Orange and Publicis Groupe declined sharply.
In economic news, Data from INSEE showed France's economy rebounded by 0.2% quarter-on-quarter in the second-quarter, in line with market expectations, following a revised 0.1% contraction in the previous period, according to preliminary estimates.
On a yearly basis, GDP expanded 0.7% in the second-quarter, slowing from a revised 0.8% in the first-quarter and marking the slowest annual expansion since the contraction in Q4 2020.
Data from Destatis showed the German economy logged a stronger-than-expected growth in the second quarter on robust exports.
Gross domestic product logged a quarterly growth of 0.2% in the second quarter after expanding by revised 0.4% in the first quarter, Destatis reported. GDP was forecast to expand 0.1%
According to provisional data, exports expanded from the first quarter. Final consumption expenditure showed a subdued trend, while capital formation declined in the second quarter.
Calendar-adjusted GDP grew strongly by 0.9% on a yearly basis, while growth was expected to slow to 0.6% from revised 0.7% in the first quarter.
Data from the Society of Motor Manufacturers Association showed UK car production dropped 1.2% year-on-year to 68,200 units in June, reversing a 3.2% rise in May.
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