Oct 9 (Reuters) - Major European companies are expected to report substantially higher third-quarter earnings, defying a challenging backdrop in global markets as borrowing costs in some of the world's biggest economies hover near multi-year highs.
Companies on Europe's benchmark STOXX 600 index are expected to report quarterly earnings growth of 21% on aggregate, mostly buoyed by the energy and basic materials sectors, the latest LSEG I/B/E/S data showed on Thursday.
That is slightly lower than the
second quarter's 23.9% growth but would mark the second-best quarterly profit growth in the past 16 quarters. Excluding the energy sector, the expected growth rate for STOXX 600 companies is a more modest 9.7%.
Revenues of European blue-chip companies are seen increasing by 10.6% from a year ago, also above the average of the past couple of years.
"Demand is strong enough to allow companies to pass on higher prices which leads to higher sales. At the same time, energy costs make up a smaller share of sales than headlines would suggest," a Deutsche Bank report said earlier this week.
European energy majors have been benefiting from the consequences of the US-Israeli war with Iran and from Ukrainian drone attacks on Russian refineries, which have sharply cut exports from some of the world's biggest producers of fossil fuels.
They are now expected to post profit growth of 115.9% for the third quarter, according to the LSEG report.
Meanwhile, companies in the European real estate sector are seen delivering earnings 71.5% smaller than in the same period last year.
Next week, investors will be closely looking at results of chip equipment supplier ASML, Europe's most valuable listed company, and Swedish telecoms equipment maker Ericsson to assess the tone of the earnings season.
(Reporting by Javi West Larrañaga in Gdansk; Editing by Milla Nissi-Prussak and Devika Syamnath)
