Telecommunications was the best performing sector in Europe Thursday after Spain's Telefonica SA (TEF - Get Report) raised its revenue guidance for the year after beating expectations with its second quarter earnings.

Telefonica shares were up 3.79% by mid-morning in Madrid and changing hands at €9.81 each, trimming their three-month loss to around 4%.

The company said it now expects revenue to grow at 1.5% this year compared with a previous forecast of "stable" performance. The move came after revenue in the second quarter to €13 billion ($17 billion) as organic growth improved.

"The strength and better business trends in the first half of the year, as well as being well-positioned to continue capturing sustainable growth in the coming quarters, allow us to upgrade our guidance for 2017," said chairman Jose Maria Alvarez-Pallete.

The company reduced its debt in the quarter to €48.5 billion, a €279 million reduction from the first quarter and €3.7 billion lower than at the same point last year.

Shares in France's Orange SA (ORAN) were up 2.55% in Paris, changing hands at €14.69 after reporting that it had returned to growth in its home market for the first time since 2009.

Revenues in France edged up 0.2% to €8.9 billion. Overall revenues in the first half of the year were 1.1% higher than the same period last year, at €20.3 billion, helped by a strong second quarter. On an adjusted basis, earnings before interest, tax, depreciation and amortization increased by 2.2% to €6 billion.

"The acceleration seen in the group's growth was confirmed by the first-half results, and in particular the performance in the second quarter, driven by France, Europe and Africa and the Middle East," CEO Stephane Richard said in a statement.

The strong numbers led other European telecoms up BT Group plc (BT) was up 1.36% to 314.8 pence, Vodafone Group plc (VOD) gained 1.38% to 222.35 pence and Deutsche Telekom (DTEGY) was up 1.61% at €15.78.#

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