EUROPE MARKETS: European Stocks Rebound On Upbeat Earnings

By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets bounced back sharply on Wednesday, helped by a round of upbeat earnings results.

The positive trading day came after a rough day on Tuesday, when a trifecta of slumping oil prices, a cut to eurozone growth forecasts and a Reuters report suggesting divisiveness in the ECB governing council, sent markets sharply lower.

Wednesday's market reaction: The Stoxx Europe 600 index rallied 1.7% to close at 336.36, after sliding 1% on Tuesday.

France's CAC 40 index picked up 1.9% to 4,208.42, while Germany's DAX 30 index climbed 1.6% to 9,315.48. The U.K.'s FTSE 100 index rose 1.3% to 6,539.14. Read: M&S leads FTSE to first gain in three days

The pound (GBPUSD) dropped to $1.5980, from around $1.6003 late Tuesday, after a disappointing reading on activity in the U.K. services sector.

Earnings boost: Among companies rising after reporting earnings, Marks and Spencer jumped 9.7% after the retailer delivered a surprise rise in underlying profits for the first half of the year. Read: M&S rallies; Lundbeck slides: Europe's big stock movers

Hannover Re SE picked up 2.2% after the reinsurer posted third-quarter profit ahead of expectations.

Lundin Petroleum AB added 3.7% after reporting a rise in profit for the third quarter.

Data: The Markit/CIPS services purchasing managers index for the U.K. slumped to a 17-month low of 56.2 in October, missing consensus forecasts of a 58.5 print. The PMI stood at 58.7 in September.

The reading on the services sector comes after data earlier this week showed the PMI for U.K. construction declined, while the manufacturing data improved.

"October's PMI surveys point to a sharp slowing in U.K. economic growth at the start of the fourth quarter, with the pace of expansion down to its lowest for almost one-and-a-half years," said Chris Williamson, chief economist at Markit, in a note.

The composite eurozone PMI for October, also out on Wednesday, indicated economic growth stabilized in the beginning of the fourth quarter, with the index up slightly to 52.1 from 52 in September.The flash reading was 52.2.

Ruble: The Russian currency (USDRUB) hit a fresh record low against the dollar after the Bank of Russia moved one step closer to letting the ruble float freely. The dollar bought 44.88 rubles around the time of the European close.

Iceland rate cut: Iceland's central bank cut its main interest rate by 25 basis points to 5.75%, in an effort to boost inflation, which is expected to slip further below its target in the coming months. It was the first rate cut in Iceland in two years.

Also read: Follow U.S. market action here

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