European shares up as travel stocks shine, Thyssenkrupp slides

The continent-wide STOXX 600 index rose 0.4%, while European travel & leisure stocks advanced 0.8%. TUI's German-listed shares rose 2.5%, with its shares listed in London adding 2.5% after the company reported more bookings and higher first-quarter revenue. Orkla dropped more than 7% after the Norwegian food processing company posted fourth quarter profit below expectations.

European stocks rose on Tuesday, lifted by the travel sector after holiday group TUI projected a positive recovery trend for the upcoming summer season while shares of Thyssenkrupp slid on a decline in quarterly profit. The continent-wide STOXX 600 index rose 0.4%, while European travel & leisure stocks advanced 0.8%.

TUI's German-listed shares rose 2.5%, with its shares listed in London adding 2.5% after the company reported more bookings and higher first-quarter revenue. Thyssenkrupp slid 6.3% as the German warship-to-car parts conglomerate said its quarterly operating profit dropped by a third, keeping gains on Germany's DAX index in check.

The focus, however, remains on U.S. inflation data for January, due later in the day, which will provide more clarity on the outlook for the Federal Reserve's interest rate hikes. In Europe, a flash reading of fourth quarter GDP is also on the radar on growing hopes that the euro zone economy most likely avoided a recession.

"Really the biggest driver now is the fact that the euro zone is going to be narrowly avoiding recession, now that's looking a lot more likely so that's obviously boosting," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. Markets also weighed whether predictions made last year about how deep the recession in Europe would be were exaggerated. "The doomsday warnings of the economy on the brink of collapse and all that... but we haven't seen quite the same level of damage," Lund-Yates said.

The STOXX 600 has risen over 9% so far this year led by better-than-expected earnings and a brighter outlook for the euro zone economy. Defensive sectors were also on the rise on Tuesday, with telecoms, real estate and healthcare rising between 0.7% and 1.8%.

Telecoms rose as Vodafone added 3.7% after Liberty Global bought a 5% stake in the British telecoms operator. London's FTSE 100 touched a fresh all-time high, last up 0.4%.

Norwegian aluminium producer Norsk Hydro fell 3.1% after posting a bigger-than-expected fall in fourth-quarter core profit and said the outlook for 2023 was "unpredictable". Orkla dropped more than 7% after the Norwegian food processing company posted fourth quarter profit below expectations.

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