By Avinash P and Niket Nishant
Oct 12 (Reuters) - Europe's equity benchmark rose on Monday, kicking off a busy week on a strong note as a surge in bank shares helped absorb the hit from higher oil prices.
The pan-European STOXX 600 index closed 0.65% higher at 635.65 points, posting its second consecutive day of gains.
After weeks of being swayed by broader economic factors such as crude prices and bond yields, investors are expected to zero in on corporate earnings this week.
Strong results could dispel
the gloom following renewed tensions in the Middle East. However, France's LVMH reported worse-than-expected third-quarter organic sales growth, as weak demand for its fashion and leather goods weighed.
Its shares closed 1.18% higher ahead of the report, while the luxury sector rose 0.95%.
Semiconductor equipment maker ASML and investment firm EQT are due to report later this week.
BANKS FIND FAVOUR
"In areas such as banking, European and Asian stocks could offer stronger value and return potential than their US counterparts," analysts at Julius Baer wrote.
Spain's bank-heavy IBEX jumped 1.33%, the most among regional peers, while the STOXX 600 banking index advanced 1.5%.
Oil prices were hovering near two-week highs as attacks on Saudi Arabia overshadowed the prospect of increased supplies after US President Donald Trump hailed fresh Russian diesel exports and a Russia-Ukraine ceasefire covering energy targets. [O/R]
David Morrison, senior market analyst at Trade Nation, said third-quarter earnings, especially from semiconductor companies and other AI beneficiaries, would be key in shaping near-term market sentiment.
Euro zone bond yields eased on Monday, further helping lift sentiment for riskier assets. [GVD/EUR]
However, yields remain near multi-year highs, reflecting concerns that interest rates will stay higher for longer.
Traders currently expect the European Central Bank to keep rates on hold at its October meeting, while pricing in a quarter-point rate hike in December, according to LSEG-compiled data.
Still, analysts point to limited scope for further ECB tightening given the euro zone's weak growth backdrop.
"The euro area cannot point to robust economic growth. That's simply not the case," Morrison added.
Among other stock moves, Nordex advanced 3.9% after the onshore wind turbine manufacturer said its project order intake in the third quarter rose 30% year-on-year.
Vallourec rose 3.8% after the French steel tube maker won a contract from TotalEnergies for the Absheron gas field in Azerbaijan.
Inwit advanced 1.8% after Reuters reported exclusively that the telecom towers company's leading shareholders were arranging the financing for a potential take-private deal.
Telecom stocks were the biggest laggards, down 0.54%.
(Reporting by Avinash P and Niket Nishant in Bengaluru; Editing by Janane Venkatraman and Toby Chopra)
