European Stocks Recover, Boosted by Earnings

European shares rose on Tuesday, boosted by strong results and deal-making across the region, recovering from the previous session's sentiment-fuelled dip.

The pan-European STOXX 600 index was up 0.3 percent, with deals in focus as rumours of stake sales moved individual stocks, while criticism of the Tesco takeover dented wholesaler Booker.

Basic resource stocks led gains, up 0.8 percent after suffering their worst daily losses in more than four months on Monday.

Wolseley was the top European gainer, up 6.3 percent and hitting almost a decade high, after posting a 25 percent rise in profit for its first half, driven by strong growth in its main market, the United States.

Portuguese oil company EDP rose 4.2 percent after it said it would buy the rest of its renewable energy subsidiary EDP Renovaveis.

Portugal's largest company also agreed the sale of its Spanish gas distribution network Naturgas to Nature Investments, a special purpose vehicle owned by a consortium of institutional investors.

EDPR jumped 9.4 percent on the news, helping Portugal's stock index outperform European peers, up 2.2 percent.

Dufry, the Swiss airport retailer, gained 3.5 percent after a report said Chinese conglomerate HNA was in talks to buy a stake, a move which would extend Dufry's reach in China.

Banco Popular was up 3 percent, the top gainer among banks, after a Spanish newspaper report said the bank's new head Emilio Saracho was in talks to sell the lender's property portfolio and a stake to Libra Group.

Neither party said it would comment on market rumours.

Credit Agricole, meanwhile, rose 2.8 percent, to the top of France's blue-chip index after Barclays switched its preference to it from Societe Generale.

Among the few fallers in early trading, Recordati was the worst-performing, down 2.4 percent after Goldman Sachs cut its rating on the stock to "sell".

The Italian pharmaceuticals company's premium to peers is excessive, Goldman analysts said, given a slightly more risky research and development profile due to early-stage clinical partnerships, and their belief that mergers and acquisitions could be less pronounced ahead.

Recordati plans around 40 percent of sales growth to come from reinvestment in M&A in 2017-2019. But Goldman said the company's market cap of 6.6 billion euros made it harder for bolt-on acquisitions to move the needle.

Wholesaler Booker was also among top fallers, down 1.9 percent after two major Tesco shareholders opposed a $4.7 billion deal by the retailer to take it over, saying it would destroy value.

Tesco's CEO said he was "completely committed" to the deal.

(Editing by Ed Osmond)