European shares edge up ahead of Powell’s speech

European shares ticked higher on Friday with traders awaiting U.S. Federal Reserve Chair Jerome Powell's speech at the Jackson Hole symposium for clues on the monetary policy outlook.

The pan-European STOXX 600 index was up 0.2% as of 0856 GMT, and set for a third consecutive weekly gain.

Most regional bourses were also in positive territory, with Germany's blue-chip DAX up 0.1% after edging down in early trading.

The German economy contracted by 0.3% in the second quarter of 2025, more than initially reported, the statistics office said, with industrial production performing worse than assumed.

Investors geared up for Powell's speech for insight on the likelihood of a September rate cut, after Fed officials appeared lukewarm to the idea.

"Jerome Powell needs to strike the right balance between offering a dovish reassurance for the markets and at the same time acknowledging persistent inflation in the U.S.," said Axel Rudolph, senior technical analyst at IG Group.

"It's possible that the market has been too negative over the last few days and then we'll probably get a relief rally to the weekend ... but Powell will probably do what he always does and make remarks which are quite neutral and say that they're data-led."

The European Union has pushed for reduced U.S. tariffs on certain sectors after locking in a trade deal. The bloc said on Thursday it would work to ensure lower tariffs on car exports applied retroactively from August 1 while continuing to press for a preferential levy on wine and spirits.

Automobile stocks added 0.6%.

UBS said in a note it remains "neutral" on euro zone equities with European markets navigating near-term macro uncertainty. The brokerage lowered its earnings growth estimate for the area this year to -3% from 0%.

With second-quarter earnings almost over, European companies are set to report a 4.6% growth in earnings according to Tuesday's LSEG I/B/E/S data. Analysts had initially expected a year-on-year growth of 9.1% before the U.S. announcement of tariffs in February.

Boosting the chemicals index, Dulux paints maker AkzoNobel rose 5.2% to the top of the STOXX 600 after activist investor Cevian Capital took a 3% stake, according to a a filing by Dutch market regulator AFM.

Standard Chartered shares gained 3.5% after the bank said it had received a favourable ruling by the U.S. Department of Justice in a long running civil case.

Shares of defence companies Renk Group and Hensoldt added 1.7% and 3.3%, respectively, after Citigroup upgraded ratings on both to "neutral" from "sell".

Poland's benchmark WIG index posted its biggest decline in more than four months, falling 2.9%, after the government proposed a hike to corporate income tax.

(Reporting by Twesha Dikshit and Sruthi Shankar in Bengaluru; Editing by Nivedita Bhattacharjee and Devika Syamnath)