- UPM-Kymmene rises on 'strong consensus beat' in Q3
- Swiss group Temenos slumps after 2022 outlook cut
Oct 14 (Reuters) - European shares climbed on Friday as hopes grew of a U-turn in some fiscal steps announced by the British government, with investors also snapping up beaten-down stocks amid worries about economic growth and its impact on corporate earnings.
The region-wide STOXX 600 index was up 1.2%, as of 0801 GMT, hitting its highest level since Oct 7. Shares in the region took cues from a positive Wall Street finish overnight.
U.S. stocks closed more than 2% higher on Thursday, supported by technical support and short-covering, even as a red-hot consumer price index report bolstered the case for a fourth straight 75-basis-point Federal Reserve rate hike next month.
Friday's gain also put the STOXX 600 on course for a weekly rise, erasing losses suffered in the first three days of the week on recession fears.
"Perhaps you have some position covering and squaring off going on," said Michael Brown, head of market intelligence at Caxton.
"It's probably likely to be relatively short-lived, given the rates pricing we see and given that the inflation data will only serve to central banks to maintain or even become more aggressive in terms of their hawkish stances."
European Central Bank (ECB) Vice-President Luis de Guindos said the central bank was prepared for a possible technical recession paired with high inflation, which must be brought down to maintain market confidence.
Meanwhile, speculation of a U-turn in UK's fiscal plans aided sentiment further. British finance minister Kwasi Kwarteng cut short his trip to Washington to return early to London, where pressure is mounting for the new government to scrap an economic policy that unleashed turmoil on financial markets.
The Financial Times newspaper reported that the British government might reverse up to 24 billion pounds ($27.05 billion) of tax cuts. London's FTSE 100 index gained 0.9%.
Focus also turns to the third-quarter earnings season, with big U.S. banks across the Atlantic set to report results later in the day.
All sectoral indexes on the STOXX 600 advanced, led by a 2.2% jump in utilities.
Temenos slumped 19.8% after the Swiss banking software group slashed its 2022 guidance, saying banks had become more cautious in their decision making amid macroeconomic uncertainty and that costs were rising.
UPM-Kymmene added 4.7% after the Finnish forestry firm posted higher Q3 results and said it expected 2022 adjusted EBIT to improve compared to 2021.
($1 = 0.8872 pounds)
Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V and Subhranshu Sahu