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* UBS surges after posting 40% rise in Q1 net profit
* Swiss engineering firm ABB jumps after profit beat
* Wirecard plunges after KPMG audit
(Updates prices to close)
By Sruthi Shankar and Susan Mathew
April 28 (Reuters) - A rally in banking shares helped
European shares end at seven-week highs on Tuesday, with further
optimism kindled by signs that several economies were starting
to ease coronavirus-driven lockdowns.
The pan-European STOXX 600 closed up 1.7% on
largely broad-based gains.
A 40% jump in first-quarter profit for UBS, the
world's largest wealth manager, and a 4.2% in Spain's Santander
despite an 82% slump in quarterly net profit lifted
Europe's battered banking sector to its highest point in
two weeks.
"We've come to a point with regard to European banks where
expectations have fallen so much because of the uncertainty, but
the earnings look stable excluding the loan loss provisions,"
said Craig Erlam, senior market analyst at Oanda.
UK-based HSBC Holdings Plc's shares rallied 1% but
it warned of more earnings pain ahead as it set aside a hefty $3
billion in bad loan provisions due to the COVID-19
pandemic.
"Banks tend to reassess their credit books at the end of a
year, so the fact that HSBC felt the need to join the big four
Main Street banks in the U.S. in taking a cautious view so early
on shows how difficult 2020 is likely to be," said Russ Mould,
AJ Bell Investment Director.
Companies listed on the STOXX 600 are expected to report a
near 25% decline in first-quarter profits, according to
Refinitiv data.
Drugmaker Novartis reported growth in quarterly
sales and confirmed its 2020 targets, but the stock gave up
session gains after its chief executive warned of a tapering
buying rush for its products and a decline in M&A activity in
the sector due to the pandemic.
The healthcare sector was the only sectoral
decliner, down 0.1%. Roche Holding, however, gained 0.9%
on positive data from its treatment for spinal muscular atrophy.
On Wall Street, all eyes will be on reports from
heavyweights such as Apple and Amazon.com this
week.
The Swiss stock index got a boost from a 5.3% jump
in ABB after the engineering company reported
first-quarter results topped expectations.
European stocks have recovered more than 25% from mid-March
lows, following unprecedented measures from major central banks
and governments to support the global economy and, more
recently, on signs that many countries such as Italy and Spain
plan to restart their economies.
But Britain stood firm on not lifting its lockdown, with the
country on track to become one of Europe's worst hit by the
pandemic.
London-based BP forecast significantly lower refining
margins in the second quarter and its first-quarter profits
tumbled by two-thirds. But shares of the oil major retraced
losses as Brent crude prices rose.
Germany's Wirecard plunged 26.1% after an
investigation by auditor KPMG found the payments company did not
provide sufficient documentation to address all allegations of
accounting irregularities made by the Financial
Times.
(Reporting by Sruthi Shankar in Bengaluru
Editing by Sriraj Kalluvila
Editing by Mark Heinrich)
