European shares close eighth month of gains on earnings lift; credit fears hit banks

Published Sat, Feb 28, 2026 · 08:09 AM

EUROPEAN shares closed at a record high on Friday to log their eighth straight month of gains after better-than-expected corporate updates, while heavyweight banks tumbled amid credit and AI-disruption concerns.

The pan-European Stoxx 600 ended 0.1 per cent higher at 633.85 points, taking its weekly gains to 0.5 per cent. It is now on its longest monthly winning streak since 2012-2013.

But banks dropped 1.7 per cent on Friday in their steepest one-day decline in two weeks. Barclays fell 4.2 per cent after media reports that banks face potential losses related to the collapse of UK mortgage provider Market Financial Solutions.

Santander shed 2.8 per cent as it owns Atlas SP Partners – a lender to MFS – with other banks. The financials-heavy stock index of Spain underperformed major peers with a 0.7 per cent loss.

“The recent stress seen in the private credit market, tied to the selloff in software companies this month, is being topped by worries regarding potential irregularities in the mortgage space,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Much of February has been dominated by concerns that new AI tools could disrupt traditional business and eat into its profits, along with confusion over trade after US President Donald Trump said he was imposing a new global tariff.

Nevertheless, investors have taken comfort from an overall improving corporate outlook in Europe, with updates from HSBC, Nestle and Capgemini lifting sentiment.

Earnings are expected to drop 0.6 per cent in the previous quarter on a year-on-year basis, compared to a 4 per cent fall analysts were expecting earlier in the month, according to data compiled by LSEG.

“February was marked by this resilience investors are looking for, the safe harbour from the technology disruption… we expect this to remain in place as long as we don’t have enough clarity on how fast AI adoption will be,” Ozkardeskaya said.

Investors flocked to healthcare and food and beverage stocks, up 1 per cent and 1.5 per cent respectively, that are considered traditionally defensive sectors amid market worries.

Among other stocks, Melrose dropped 11.6 per cent to the bottom of the Stoxx 600 after the GKN Aerospace owner flagged softer-than-expected revenue for 2026 as sector-wide supply chain constraints persist.

British Airways owner IAG beat annual profit expectations. However, shares fell 7.4 per cent along with the broader travel and leisure sector – the biggest sectoral loser – as crude prices gained over 3 per cent.

Online takeaway food company Delivery Hero fell 4.4 per cent after reporting annual gross merchandise value slightly below market expectations, reflecting competitive pressure and a challenging economic environment.

Swiss Re shares added 3.7 per cent after the reinsurer posted a better-than-expected rise in net profit of 47 per cent and announced an additional US$1 billion share buyback. REUTERS