Profit rises at UBS, Deutsche Bank and BP, just some of the European companies reporting earnings, adding to the fairly positive corporate picture in the region. But BP warned further Western sanctions on Russia could harm its business there, and investors remain cautious. Joanna Partridge reports.
A busy earnings day in Europe. UBS among the banks reporting - and leading the way with estimate-beating quarterly results, and net profit of 792 million Swiss francs. The Swiss bank has also booked a 254 million euro charge to settle claims it helped wealthy Germans dodge their taxes. The shadow of costly litigation and settlements is also looming over Deutsche Bank. But its second quarter profit still rose 16% percent to 917 million euros. The lender faces investigations ranging from allegations of manipulating the Libor benchmark rate to favouring some investors in so-called dark pools. It's already paid 5 billion euros in settlements and fines over the past two years. And in the latest development, U.S. regulators are looking into Deutsche and UBS' speed trading operations. Britain's Lloyds Banking group may also face further punishment - just a day after agreeing to pay $370 million of fines for its part in a global interest rate rigging scandal, and for attempting to manipulate fees for a government lending scheme to help banks. On the whole, European corporate results haven't been as strong as those in the U.S., says Alastair McCaig from IG. SOUNDBITE: Alastair McCaig, Market analyst, IG, saying (English): "Maybe a reflection of the fact that mainland Europe is that much further behind the U.S. economy as far as the recovery is concerned, and we're still seeing major wobbles in France and Germany, it looks like being effectively dragged back by the French, rather than mananging to make progress." Another major preoccupation for investors - further Western sanctions on Russia. Oil and gas producer BP's profit jumped in the second quarter. Bu it warned more measures could hurt its business in Russia and damage its relationship with state oil company Rosneft. BP is by far the largest foreign investor in the country. But it's not just companies with interests in Russia who could be affected, it could also hurt the euro zone recovery, says James Bevan from CCLA Investment Management. SOUNDBITE: James Bevan, Chief Investment Officer at CCLA Investment Management, saying (English): "If one looks at the trade linkages between Russia, the eastern European companies and also of course by extension the mainstream banks and oil companies, there are considerable risks." Diplomats said EU governments reached a deal on Tuesday to impose more sanctions. They'll target Russia's oil industry, defence, dual-use goods and sensitive technologies, and will be reviewed after three months.