Upbeat corporate guidances lift European shares, Nvidia forecast boosts chip stocks

By Shreyashi Sanyal and Bansari Mayur Kamdar

(Reuters) -European shares inched higher on Thursday, after two straight sessions of declines, supported by financial stocks and upbeat guidance by regional companies, while U.S. semiconductor designer Nvidia's positive sales forecast sparked a rally in chip stocks.

The pan-European STOXX 600 index rose 0.1%.

AXA rose 3.2% after the French insurer raised its 2023 guidance and announced a share buy-back programme, while posting lower-than-expected full-year earnings.

Banks gained 0.9%, while insurers added 0.3%.

Also aiding sentiment, data earlier in the day showed that euro zone inflation was only a touch higher than earlier estimated in January, confirming that price growth is now well past its peak.

The rate-sensitive technology sector rose 0.4%, supported by a jump in semiconductor stocks.

Chipmakers ASM International, BE Semiconductor and Aixtron gained between 0.4% and 1.2%.

U.S. peer Nvidia Corp forecast first-quarter revenue above Wall Street estimates on Wednesday, noting a strong boost from the use of its chips in artificial intelligence (AI) services such as chatbots.

The shorter-term demand for chips will get a boost to fuel "an AI gold rush, if you think such a phenomenon will actually materialize," said Greg Bassuk, chief executive at AXS Investments.

However, the worries of central banks raising interest rates for longer still lingered.

The minutes from the U.S. Federal Reserve's last policy meeting released on Wednesday showed nearly all policymakers rallied behind a decision to further slow the pace of interest rate hikes, noting inflation would determine how much further rates needed to rise.

"The starkest takeaway was, arguably, that some policymakers could have gotten behind another 50 basis point increase and all backed further tightening ahead," said Craig Erlam, senior market analyst at OANDA.

Recent data showed French and German economic activity moved into growth territory, while a rebound in U.S. business activity also backed views that interest rates in both economies will remain higher for longer.

Still, the STOXX 600 has risen nearly 9% so far this year, more than double the S&P 500 index's 3.9% rise.

Europe has benefited from better weather, hopes that the economy will narrowly avoid a recession and a boost from China's reopening.

Engineering firm Rolls-Royce surged 23.7%, to the top of the STOXX 600, after the company's CEO forecast more profit growth in 2023 after last year's profit beat expectations.

Auto stocks rose 1.0%, with carmaker Stellantis up 3.6%.

Media stocks were up 0.3%, boosted by a 3.4% rise in British ad group WPP after it forecast better-than-expected organic growth of 3% to 5% for the year.

UK banks and healthcare majors fell, weighing on the FTSE 100 index. Barclays, Standard Chartered, AstraZeneca and GSK fell as they traded without an entitlement for dividend payout.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu, Savio D'Souza and Andrew Heavens)