- Smith+Nephew leads gains on STOXX 600 after profit report
- Diageo and DHL boost European shares with positive results
- Euro zone business growth inched up in July
Aug 5 (Reuters) - European shares rose on Tuesday, lifted by better-than-feared results from Diageo and DHL and improved investor sentiment on hopes of a Federal Reserve rate cut next month.
The pan-European STOXX 600 index edged up 0.3%, as of 0828 GMT, with most regional bourses also trading in the green.
Earnings season was in full swing, with Diageo gaining 6.5% after the world's biggest spirits maker forecast flat 2026 sales despite the impact from tariffs and upped its cost-savings target.
German logistics giant DHL added 3.6% after reporting a higher than expected second-quarter operating profit.
"Companies want to be on the cautious side for the moment and will assess and give more guidance when we have a bit more visibility on that front," said Amelie Derambure, senior multi-asset portfolio manager at Amundi.
"The removal of the uncertainty is one factor that is helping European markets, even if the tariff rate is probably a bit higher than what market participants or European politicians would have expected or hoped to see."
The wider STOXX 600 index has retreated further away from a four-month peak hit last week as investors worried that the 15% baseline U.S. levies on most EU goods would hurt businesses, slow growth and stoke inflation.
Latest survey showed business activity in the euro zone grew at a slightly faster pace in July than in June but remained sluggish as demand dipped. U.S. business surveys are due later in the day.
Rate-sensitive banks stocks shed 0.5%, in tandem with a fall in euro zone yields, while Diageo helped lift the European food & beverage index by 1.2%.
Among other movers, Fresnillo ranking among top gainers, jumped 9.5% after the miner reported positive first-half results.
Smith+Nephew led gains, jumping 14.9% after the British medical products maker posted a rise in first-half profit and announced a new $500 million share buyback for the remainder of the year.
Hugo Boss was up 6.8% after cost-cutting measures led to the German fashion brand reporting a better-than-expected operating profit for the quarter.
BP added 1.6% after the oil giant said it would review assets and costs in order to improve profitability with second-quarter profit beating expectations.
Global stocks were buoyant as traders ramped up bets of a U.S. rate cut following a soft U.S. nonfarm payrolls data last week.
Reporting by Twesha Dikshit and Medha Singh; Editing by Rashmi Aich and Janane Venkatraman
Source: Reuters