STOXX 600 inches lower as investors sift through earnings, higher oil prices

By Avinash P

Oct 28 (Reuters) - European shares inched lower on Wednesday as investors weighed a flood of earnings reports from major banks and other firms, with higher oil prices further dampening sentiment ahead of pivotal central bank decisions.

The pan-European STOXX 600 index was down 0.3% at 641.99 points by 1015 GMT.

Deutsche Bank gained 2.3% after reporting a 2% rise in third-quarter profit, defying expectations for a decline.

Standard Chartered jumped 3.3% after hiking its full-year growth and profitability targets.

On the flip side, Spain's Santander fell 4.5% after third-quarter results as weaker earnings in Brazil weighed, leading the bank-heavy Spanish benchmark down 1.5%, the most among peers.

UBS dipped 2% after posting a third-quarter net profit roughly in line with expectations.

The Euro STOXX Banks index fell 1% as investors assessed a mixed bag of earnings, reflecting elevated expectations for lenders at a time of weak euro zone growth and concerns over banks' exposure to government debt.

However, analysts remained constructive on the sector.

"We still expected the banks to remain in a good place in terms of their business strength because we have not seen the economies weaken as much as we would have expected them to weaken," said Ipek Ozkardeskaya, senior analyst at Swissquote.

Investors have relied on earnings to look past political uncertainty in France and rising oil prices, which have rattled investor confidence and kept the STOXX 600 in a narrow range since the start of last week.

However, oil prices climbed more than 1%, dampening risk appetite ahead of the European Central Bank's rate decision due on Thursday where economists expect the central bank to remain on hold.

Among other earnings, Stellantis added 5.7% after posting a slight increase in operating income in the third quarter, leading gains on the automobile sector which rose 0.9%.

Valmet advanced 8.5% after process industries tech firm quarterly earnings jumped.

Conversely, Adyen dropped 11.3% after the Dutch payment processor slashed its core earnings margin to 50% from around 52% earlier and withdrew its medium-term EBITDA target.

Technology names were volatile, last trading flat, ahead of important earnings from Wall Street majors Alphabet and Microsoft, due after US markets close on Wednesday, which could set the tone for the AI trade.

Italian shares were down 0.2% ahead of its budget approval for 2027 on Wednesday after successful talks with European Union authorities over granting a temporary increase in the fiscal deficit.

Also across the Atlantic, investors will be closely monitoring the US Federal Reserve's verdict on interest rates later in the day.

(Reporting by Avinash P in Bengaluru; Editing by Janane Venkatraman and Vijay Kishore)