European stocks rack up second week of gains, Pandora leaps

Drugmaker Novo Nordisk gained 3.3% after raising its 2020 sales and operating outlook. German online fashion company Zalando rose 3.2% and Global Fashion Group surged 24.0% after upgrading their earnings outlook.

European stocks posted a second consecutive week of gains on Friday as bumper forecasts from Denmark's Pandora and Novo Nordisk set a brighter tone for the earnings season, while investors kept an eye out for signs of fresh U.S. stimulus.

The STOXX 600 index ended up 0.6% to close the week with a gain of 2.1%. Global equities advanced this week as growing expectations the Democratic party will win U.S. elections next month revived hopes for more economic stimulus there.

In Europe, a string of mergers and acquisitions as well as a rebound in beaten-down sectors like travel & leisure, banks and oil & gas lifted regional markets. Shares of aircraft engine maker Rolls Royce have almost doubled in value since Monday, while British Airways owner-IAG jumped 13.2%.

Jewellery maker Pandora rose 17.2% to the top of STOXX 600 on Friday after hiking its profit guidance on stronger sales and a big boost to its online business. Drugmaker Novo Nordisk gained 3.3% after raising its 2020 sales and operating outlook.

German online fashion company Zalando rose 3.2% and Global Fashion Group surged 24.0% after upgrading their earnings outlook. Companies on the STOXX 600 are expected to post a profit decline of 38% in third quarter and 22.7% in the current quarter, according to Refinitiv data, as businesses recoup from the coronavirus-driven hit.

"Even though we've had rising infection rates in developed markets for the best part of the month, there hasn't been any negative impact on consensus earnings forecasts," said Alastair George, head strategist at Edison Investment Research. "As long as strict lockdowns can be avoided, equities are likely to continue to make progress on the back of very loose monetary policy and global stimulus packages as well."

Europe surpassed 100,000 daily reported COVID-19 cases for the first time on Thursday, after countries such as Russia and United Kingdom saw no respite in the mounting number of infections every day in the past five days. However, UK stocks got a boost as British finance minister Rishi Sunak announced his latest programme to try to stave off a surge in unemployment.

Euronext declined 4.4% after hitting a record high last week. London Stock Exchange accepted a 4.325 billion euro ($5.09 billion) cash offer from the pan-European bourse operator for the Milan stock exchange. German chemicals group BASF fell 3.8% as it slashed its outlook after heavy writeoffs in third quarter.

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