German share price index DAX graph is pictured at the stock exchange in Frankfurt
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 24, 2023. Reuters

European shares marched higher on Thursday as upbeat quarterly results from STMicroelectronics, Sabadell and Nokia eased some worries about the impact of stubborn inflation and slowing economic growth on corporate profit.

The pan-European STOXX 600 rose 0.4% in morning trade, with retail and financial services and banking stocks leading the gains.

Shares of STMicroelectronics jumped 5.6% after the chipmaker reported bigger-than-expected quarterly sales.

Sabadell soared 8.8% as the Spanish lender announced a share buyback and an upbeat full-year outlook, while Finnish telecom equipment maker Nokia rose 4.4% after the company beat quarterly operating profit expectations and forecast higher 2023 sales.

"European companies seem to be more resilient than expected," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"Concerns (of a deeper recession) have been lifted somewhat, which means slightly more positive outlook for companies concentrated in the European market. However, there is still clearly pockets of weakness around."

Investors also looked forward to the U.S. fourth-quarter Gross Domestic Product (GDP) data due later in the day that is likely to show the world's largest economy maintained a strong pace of growth, but momentum appears to have slowed considerably towards the year-end due to higher interest rates.

Meanwhile, Tesla Inc rose jumped about 7% in premarket trading, looking to boost Wall Street at the open, after the electric carmaker beat fourth-quarter revenue estimates and top boss Elon Musk gave bullish sales outlook.

On the other hand, shares of SAP fell 3.4% even as the Germany software company planned to slash 2.5% of its global workforce, and explored the sale of its remaining stake in Qualtrics.

Expectations that the euro zone economy will make a soft landing in 2023 have grown due to China's reopening and Europe's ability to keep lights on through the winter, supported by warmer weather and ramped-up energy capacity.

Strong forecasts for fourth-quarter 2022 earnings and sales have dimmed further, with Refinitiv I/B/E/S data on Tuesday suggesting European companies will see barely any revenue growth.