By Susan Mathew and Devik Jain
(Reuters) -Europe's STOXX 600 index closed near a seven-week high on Thursday, boosted by a slew of upbeat earnings from companies including Moncler and Ipsen, while weak U.S. GDP data eased worries about the future pace of U.S. interest rate hikes.
The pan-European index ended 1.1% higher at 432.77 points, rising for a second straight day, with shares of Ipsen surging 16.2% after the biopharmaceutical group reported strong results and raised its outlook.
Luxury stocks got a boost from puffer jacket maker Moncler's sales beat. Moncler gained 8%, while Louis Vuitton owner LVMH rose 4.2%, providing the biggest boost to the STOXX 600.
However, Spain's IBEX 35 index fell 0.5% as the euro zone's second-biggest lender, Santander (BME:SAN), slipped after missing profit estimates.
"While the Q2 reporting season has been in line with expectations so far ... the risk is that the recent good market performance is a bear market rally, as the earnings and economic outlook has clouded significantly and consumer spending is starting to weaken," strategists at Berenberg wrote in a note.
"We remain moderately 'underweight' equities for the time being."
Meanwhile, data across the Atlantic showed the U.S. economy unexpectedly contracted in the second quarter, with consumer spending growing at its slowest pace in two years, fanning recession worries.
The report came a day after the U.S. Federal Reserve raised its main interest rate by 75 basis points, but dropped guidance on the size of its next rate hike and noted that "at some point" it would be appropriate to slow down.
"Today's report will not deter the Fed from feeling that it has more work to do over the course of the autumn," said Hugh Gimber, global market strategist at J.P. Morgan Asset Management.
"Yet looking further out, both growth and inflation dynamics are likely to be signalling that a less aggressive approach from the Fed is required as we move into 2023 ... investors will take some comfort from the fact that the most aggressive moves from the Fed may now be behind us."
The STOXX 600 has declined this year as investors price in a hit to corporate profits on concerns that aggressive central bank attempts at controlling surging inflation could tip economies into recession. The energy crisis in Europe, stoked by the Russia-Ukraine war, has added to worries.
Data showed German inflation edged up unexpectedly in July, driven by an energy supply crisis.
Milan's main stock index jumped 2.1% as upbeat results lifted carmaker Stellantis and chipmaker STMicroelectronics.
Vestas Wind surged 15.9% after U.S. Democratic senators agreed on a bill aimed at investments in green energy.
Scor slumped 18.6% after the French reinsurer posted a second-quarter loss due to the impact of the Ukraine war and a drought in Brazil.