By Ozan Ergenay, Johann M Cherian and Ankika Biswas
(Reuters) -European shares gained on Wednesday after a bruising sell-off in the previous session, supported by healthy quarterly results from consumer giants LVMH (EPA:LVMH) and Adidas (ETR:ADSGN), while investors also kept a cautious watch on developments in the Middle East.
The continent-wide STOXX 600 closed 0.2% higher, after notching its biggest one-day drop in over nine months on Tuesday, with the personal and household goods sector jumping 1.8%.
Adidas soared 8.6% to an over two-year high, topping Germany's blue-chip index, as the sportswear company hiked its outlook for 2024 after posting better-than-expected preliminary results for the first quarter.
LVMH climbed 2.8% after the world's largest luxury group's first-quarter sales offered some reassurance to investors concerned about the industry's outlook.
With other luxury names Hermes and Richemont (LON:0QMU) climbing 2.3% and 3.0%, respectively, the broader sector gained 1.8%.
"Resilient global growth and improving consumer and business confidence should allow for favourable first-quarter earnings," said Joaquin Kritz Lara, chief economist at Numera Analytics.
Capping gains, technology stocks dropped 3.2%, hauled down by ASML (AS:ASML)'s 6.7% slide after Europe's biggest tech firm reported weaker-than-expected first-quarter new bookings.
With interest rates at record highs, investors are keeping a close eye on the health of corporate Europe this earnings season. Technology stocks are in the spotlight, having spearheaded the STOXX 600's rally since late last year on euphoria around artificial intelligence.
First-quarter profits are expected to have declined 12.1% year-on-year, according to LSEG data on Tuesday.
Data showed euro zone inflation slowed across the board in March, reinforcing expectations for a European Central Bank interest rate cut in June, even as rising energy costs and a weak euro cloud the outlook.
On the policy front, ECB board member Piero Cipollone noted plenty of fresh data in June and July could bolster the case for rate cuts, while Bundesbank President Joachim Nagel highlighted euro zone's price pressure could continue for some time.
Among top stocks, International Distributions Services jumped 28.9% to top the STOXX 600. Czech billionaire Daniel Kretinsky is working on improving an offer for the owner of Britain's Royal Mail (LON:IDSI), after his investment vehicle said its non-binding bid was rejected.
Naturgy jumped 6.1% after Abu Dhabi's TAQA confirmed talks with the Spanish energy firm's three largest shareholders over a possible takeover bid.
German automotive supplier Continental dropped 5.5% after a first-quarter revenue and profit margin miss.
Just Eat Takeaway (LON:JETJ) shed 4.5% after the food delivery company missed first-quarter total orders estimates.