Telecommunications was the best performing sector in Europe Thursday after Spain's Telefonica SA (TEF) 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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