LONDON (Reuters) – Luxury stocks were a silver lining for European markets on Wednesday after strong results from LVMH reassured investors, while looming U.S.-China trade talks kept trading muted and some earnings disappointments weighed.

Europe’s STOXX 600 hovered around flat with Germany’s trade-sensitive DAX down 0.3 percent and France’s CAC 40 up 0.5 percent.

Britain’s FTSE 100 jumped 0.8 percent thanks to a weaker pound boosting London-listed multinational exporters.

LVMH shares jumped 7 percent after upbeat results from the luxury conglomerate, which said it was “cautiously” confident as fourth-quarter sales held up despite fears of a China slowdown.

“This healthy set of numbers, combined with a positive tone from management, should provide investors with much-needed comfort about the current trends in the luxury market,” Berenberg analysts said.

Hermes, Richemont, Gucci owner Kering, Moncler and Burberry were among the top boosts to the STOXX 600, rising 2.5 to 5.2 percent.

Even Italy’s Salvatore Ferragamo, which reported a drop in sales, climbed 2.5 percent as the LVMH beat lifted the luxury sector.

Industrial conglomerate Siemens fell 0.9 percent as strong order intake softened the blow from weaker-than-expected first quarter industrial profit.

“Highest order intake in 10 years will be viewed positively, but may be overshadowed by the margin miss in EM (Energy Management) and BT (Building Technologies),” UBS analysts said.

Shares in French IT consulting firm Atos surged 8.2 percent to top the STOXX 600 index. The company said it would distribute 23.4 percent of shares in its subsidiary Worldline to shareholders.

Atos peer Alten also gained 7.2 percent after it reported full-year revenue rose in 2018.

Meanwhile pharma giant Novartis was the biggest drag on the STOXX, down 2.5 percent after analysts said its 2019 earnings growth guidance was disappointing.

“Management provided guidance for 2019 based on two scenarios (including or excluding Alcon and the Sandoz U.S. oral solids business) that we believe implies 2-3 percent downgrades to consensus,” wrote Liberum analysts.

Swiss drug ingredients maker Lonza tumbled 6.9 percent after it said Chief Executive Richard Ridinger was retiring and reported sales below expectations.

“Ridinger successfully executed a remarkable turnaround of Lonza so will be missed, and given Lonza is only partway through the mid-term outlook period the succession may be viewed as heightening uncertainty,” Jefferies analysts said.

German chemicals group Covestro topped the DAX, up 6.5 percent as traders and analysts said Chinese rival Wanhua hiked its prices for MDI – a material used in polyurethane foams.

Overall, earnings growth expectations for Europe have come down in recent months as analysts globally slashed their estimates, spooked by weak economic data. Investors in Europe reckon there is further to go.

“We see earnings growth expectations for 2019 as still too high. We’re probably still between 8 or 9 percent growth for this year and that will probably have to come down to low-to-mid single digits,” Britta Weidenbach, head of European equities at DWS, said.

“What is interesting is that some of the stocks already have been punished so hard in the recent downturn, especially at the end of last year, that actually they react rather positively to results that are, in a way, disappointing,” Weidenbach said.

(Graphic: MSCI Europe earnings growth expectations Jan 30 – tmsnrt.rs/2B9zi1t)

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