Europe's STOXX 600 logs best day in three months as banks shine

By Ankika Biswas and Johann M Cherian

(Reuters) -Europe's benchmark stock index had its biggest one-day gain in more than three months on Friday, propelled by banking and industrial stocks, while the technology sector got a boost from upbeat results from U.S. megacaps.

The pan-European STOXX 600 index closed 1.2% higher, notching up a weekly gain of 1.8%, its biggest since late January.

The basket of STOXX 600 banks touched a nine-month high, aided by a 6.1% jump in NatWest after the British bank's first-quarter results.

Industrials climbed 1.8%, led by a 11.4% leap in Finnish engineering group Wartsila after first-quarter order intake and core profit beat estimates.

Construction and materials led sectoral gains, up 2.1%, with Saint Gobain's shares 6.9% higher after a first-quarter revenue beat.

The technology sector jumped 1.9% as investors took comfort from upbeat quarterly results from Microsoft and Alphabet and a moderate rise in U.S. inflation.

Meanwhile, expectations of a June interest rate cut were bolstered by a European Central Bank report revealing continued stagnation in euro zone lending in March and consumers trimming their inflation expectations as the economy loses steam.

"The ECB has prepared the ground for a first rate cut in June, but has sent a conditional signal for that," Deutsche Bank analysts wrote.

"The decision to dial back the degree of policy restriction will be a function of how the Governing Council reads the inflation outlook, underlying inflation and the transmission of the monetary stance," Deutsche Bank added.

Even though the benchmark STOXX 600 regained its pace this week, it's set to snap a five-month winning streak as investors try to navigate concerns over escalating Middle East tensions, a mixed corporate earnings and uncertainty over policy outlook.

Among others, Swedish home appliance maker Electrolux climbed 6.5% after a lower-than-expected first-quarter operating loss.

Thyssenkrupp rose 6.2% as the German conglomerate said it will sell a 20% stake in its steel business to the energy holding controlled by Czech billionaire Daniel Kretinsky.

Danish shipping giant Maersk advanced 6.2%, with analysts pointing to an uptick in the Shanghai Containerized Freight Index (SCFI) spot freight rates.

Chemicals were the only sectoral laggard as Yara International, one of the world's largest fertiliser makers, fell 6.2% after missing first-quarter profit forecasts.

Delivery Hero slumped 16%, a day after a guidance hike sent the stock as much as 14% higher.

Signify shed 11.3% as the world's biggest maker of lights missed expectations for first-quarter adjusted core earnings.

(Reporting by Johann M Cherian and Ankika Biswas in Bengaluru; Editing by Mrigank Dhaniwala, Sohini Goswami and Alexander Smith)