European Markets Soar as Corporate Earnings Impress and Defence Sectors Shine

European shares reached their highest in over two months, buoyed by aerospace, defence, and financial stocks amid strong corporate earnings. Key gainers included Admiral and Aviva. Although optimism surrounds a potential Federal Reserve rate cut, U.S. data tempered expectations. Britain's economy slowed less than anticipated, while Thyssenkrupp and Carlsberg faced setbacks.

On Thursday, European shares surged to their highest in more than two months, driven by gains in aerospace, defence, and financial stocks as investors evaluated a series of corporate earnings reports. The pan-European STOXX 600 index rose by 0.6%, after reaching a two-week intraday peak.

Industrial stocks, especially in the aerospace and defence sectors, emerged as significant winners. The wider index climbed 2.2%, amidst speculation ahead of a summit between U.S. President Donald Trump and Russian President Vladimir Putin. Richard Flax, the chief investment officer at Moneyfarm, highlighted the uncertainty regarding Europe's anticipated defence spending, particularly its allocation to European companies.

Strong corporate earnings reports further buoyed investor sentiment. Insurance stocks increased by 0.9%, with London's Admiral achieving a record high following robust first-half profits. Meanwhile, Aviva experienced a 2.6% rise upon elevating its interim dividend. Conversely, Dutch payments firm Adyen saw a 4.9% drop after adjusting its annual revenue forecast.

(With inputs from agencies.)