European shares were set to snap a three-week losing streak on Friday, supported by continued strength in earnings updates, as volatility calmed down and jitters over rising inflation eased.

Gains in the energy sector on the back of rising oil prices and solid updates from large cap companies including Schneider, Eni and Renault (PA:RENA) helped the pan-European STOXX 600 index rise 0.5 percent by 0818 GMT.

The STOXX is up more than 2 percent so far this week but it is still down around 7 percent from the 2 1/2 year peak hit in January.

This week's recovery follows a turbulent start to February, when worries over inflation caused a global sell-off in equities.

"The reason for the change in sentiment may well be down to the fact that the overall global economic picture continues to remain fairly positive," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

According to the latest data from Thomson Reuters, European fourth-quarter earnings are seen rising 14.6 percent. That is a big upwards revision from last week's 11 percent growth forecast and follows 15 weeks marred by a string of downgrades.

The revision has brought Europe to just below the 14.8 percent growth rate expected for the S&P 500, although "earnings beats" in the U.S. stand at 78 percent versus 50 percent in Europe.

On the day, the biggest gainer on the STOXX was Vopak, up 12.5 percent, after earnings fell less than expected, while Eutelsat soared 5.8 percent following its first-half update.


Swedish defence firm Saab however plummeted 11.1 percent as its dividend proposal fell short of expectations.