UPDATE 2-Auto rally, corporate earnings push European shares to record highs


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    * Dailmer jumps 5.5%, Valeo rises on strong H1
    * ASML hits fresh record 
    * EZ business activity expands in July

 (Updates to close)
    By Sruthi Shankar and Susan Mathew
    July 23 (Reuters) - European stocks closed at all-time highs
on Friday as optimism about the earnings season and the European
Central Bank's pledge of continued monetary support outweighed
risks of a resurgence in COVID-19 cases.
    The pan-European STOXX 600 index  .STOXX  rallied 1.1% to
hit a record high of 461.75, and marked a 1.5% weekly rise - its
biggest weekly gain since early May.
    Automakers  .SXAP  were the top gainers, up 2.5%. 
    Mercedes-Benz maker Daimler  DAIGn.DE  gained 5.5% after
Kepler Cheuvreux upgraded its stock to "buy", saying its growth
is not properly reflected in the share price.  urn:newsml:reuters.com:*:nL8N2OZ1CO
    French car parts maker Valeo  VLOF.PA  jumped 6% after it
posted higher first-half sales and profit, and said it expected
the shortage of key technology chips to ease.  urn:newsml:reuters.com:*:nL1N2OY1PT
    Peers Faurecia  EPED.PA  and Continental AG  CONG.DE  rose
more than 3% each.
    A bout of selling hit financial markets on Monday as
investors grew nervous about the fast-spreading Delta variant of
COVID-19 hampering a global economic recovery. 
    However, strong earnings reports and the ECB's commitment 
keep interest rates at record lows for even longer pushed the
benchmark STOXX 600 higher every day since then. 
    "The Monday selloff seems like a moment of brief panic, and
... was enough, it appears, to reset sentiment and activity and
prompt a resurgence of bullish momentum. Central bank(s) have
done their bit to allay fears, most notably the ECB this week,"
said Chris Beauchamp, chief market analyst at online trader IG. 
    The focus next week will be on the U.S. Federal Reserve's
two-day meeting. Chair Jerome Powell's dovish stance so far has
helped markets stay on an upward trajectory.   
    Rafale jets maker Dassault Aviation  AVMD.PA  climbed 4.5%
on reporting higher sales and profits in the first half, while
UK's Vodafone  VOD.L  rose 2.4% after a service revenue beat.
 urn:newsml:reuters.com:*:nL8N2OZ1CU  urn:newsml:reuters.com:*:nL1N2OY1NX
    Chip equipment maker ASML  ASML.AS  hit a fresh record high
as strong earnings forecast earlier this week prompted
brokerages to hike their price target.  
    "We believe that European markets will benefit from the
growth recovery in the second half of the year," said Esty Dwek,
head of global market strategy at Natixis Investment Managers. 
    Euro zone business activity expanded at its fastest monthly
pace in over two decades in July, IHS Markit's flash survey
showed, but fears of another wave of infections hit business
confidence.  urn:newsml:reuters.com:*:nZRN002DOV
    German Purchasing Managers' Index (PMI) hit its highest
level in nearly a quarter of a century, creating inflationary
bottlenecks.  urn:newsml:reuters.com:*:nZRN002DOH
    Danske Bank  DANSKE.CO  slid 4.3% on dismal return on equity
declined in the first quarter, while Norwegian solar energy
company Scatec  SCATC.OL  slumped 16.2% after a core profit
miss.  urn:newsml:reuters.com:*:nL8N2OZ1TM urn:newsml:reuters.com:*:nL1N2OZ07Q

STOXX 600 hits record high, posts bets session since early May  
 (Reporting by Sruthi Shankar in Bengaluru; Editing by Vinay
Dwivedi, Arun Koyyur and David Evans)
 ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223
8780; outside U.S. +91 80 6182 2787;))

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