European shares close higher as financials, L'Oreal rise; Fed spat still a worry

Swiss insurers Helvetia and Baloise to merge; shares up

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Novo Nordisk drops after positive trial results of Lilly's weight loss pill

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L'Oreal advances after reporting rise in Q1 sales

April 22 (Reuters) -

European shares ended slightly higher on Tuesday on the back of rising financials and post-earnings gains in L'Oreal, though sentiment remained shaky after U.S. President Donald Trump's critique of Federal Reserve Chair Jerome Powell.

The pan-European STOXX 600 index ended 0.2% higher, well off session lows, with L'Oreal jumping 6.3% for its best single-day gain in nearly seven months.

The beauty giant

reported

a rise in first-quarter sales, beating expectations - a bright spot in the sector after luxury group LVMH reported

slower growth

at its beauty retailer Sephora last week.

European banks kicked off the week 0.7% higher. The basic resources index - which includes Europe's biggest mining companies - gained 1.2% on the back of higher metal prices.

However, heightened global trade tensions remained at the heart of investor concerns as they returned from an extended Easter weekend.

The International Monetary Fund

slashed its forecasts

for growth in the United States, China and most countries, citing the impact of U.S. tariffs now at 100-year highs, and warning that further trade tensions would slow growth further.

Meanwhile, Trump's repeated criticisms of Powell, urging the central bank to cut interest rates quickly, aggravated fears for the independence of the Fed.

"It's just a picture of uncertainty out there. Nothing really has changed," said Daniela Hathorn, senior market analyst at Capital.com.

Back in Europe, the ECB's Survey of Professional Forecasters indicated euro zone

inflation

could be a touch higher this year than earlier thought, but will then stabilise at the European Central Bank's 2% target.

Shares in Swiss insurers Helvetia and Baloise rose 2.6% and 4.7% respectively after they said they plan to merge, creating Switzerland's second-largest insurance group with a combined market share of about 20%.

On the downside, Danish drugmaker Novo Nordisk dropped 7.4% to its lowest since October 2022, after trial results from U.S. rival Eli Lilly's experimental pill for weight loss and blood sugar showed it working just as well as Novo Nordisk's blockbuster drug Ozempic.

The region-wide healthcare index fell 0.6%.

Danish renewables company Orsted fell 4.7% after Barclays

cut

the company's stock to "underweight" from "equal weight".

Sweden's Getinge lost 5.5% after the medical equipment maker reported quarterly

core earnings

just below market expectations.

($1 = 9.5059 Swedish crowns) (Reporting by Sukriti Gupta, Medha Singh, Nikhil Sharma and Shashwat Chauhan in Bengaluru; Editing by Nivedita Bhattacharjee, Varun H K and Kevin Liffey)