© Reuters. A trader works at his desk at the stock exchange in Frankfurt

MILAN (Reuters) – A dovish policy decision by the Federal Reserve overnight supported European shares on Thursday with higher crude prices and a strong update from Shell (LON:) sending oil stocks rallying and helping offset poor updates from Nokia (HE:) and Unilever (LON:).

The index rose 0.4 percent to its highest since Dec. 4 in early trading and on track for its best monthly performance since October 2015.

Germany’s and the UK’s rose 1 and 0.7 percent respectively.

Royal Dutch Shell said profits jumped by more than a third last year to $21.4 billion, the highest since 2014, sending its shares up more than 3 percent and making the oil index the biggest sectoral gainer in Europe.

Strong results also from Diageo (LON:), up 3.9 percent after the world’s largest spirits company posted higher half-year sales on Thursday, helped by strength in India and China.

Relief from the Fed and the strong update from Shell however were partly offset by some disappointing updates, which could trigger further downgrades to earning expectations as the economic outlook remains gloomy.

Swatch tumbled 7.6 percent after the Swiss watchmaker posted lower-than-expected results amid a downturn in Asia and France, while a disappointing update sent Germany’s Software down 8 percent to the bottom of the STOXX.

Nokia was another heavy faller, down 5.6 percent and on track for its worst day since Oct 2017, as it forecast a soft first half after beating fourth-quarter profit and sales expectations.

Consumer goods giant Unilever was down 2.6 percent as it reported lower-than-expected fourth-quarter sales, hurt by inflation in Argentina and flat volume growth in developed markets.

Analysts have been steadily cutting profit expectations for European firms. According to Refintiv IBES, fourth-quarter earnings for the STOXX 600 are expected to have grown less than 4 percent, from more than 10 percent expected last month.

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