European stocks rebounded from their biggest two-day drop since April, helped by a rally in German shares. Greek shares fell amid a debt impasse.
The Stoxx Europe 600 Index added 0.6 percent to 385.49 at the close of trading. It reversed losses of 1.1 percent after the European Commission said it would restart talks with Greece if offered new proposals. Germany’s DAX Index also swung to gains, rising 0.5 percent as a drop in the euro helped exporters. Spanish and Portuguese shares erased declines exceeding 1.5 percent.
“Stocks will recover once people refocus on improving fundamentals without distractions fogging up the picture,” said Michael Woischneck, an equity manager at Lampe Asset Management GmbH in Dusseldorf, Germany. He helps oversee about $7 billion. “We can contain any fallout from Greece, especially for Spain, Ireland and Portugal.”
Greece’s ASE Index fell 4.8 percent, completing the biggest three-day drop since anti-austerity party Syriza took charge in January. Weekend negotiations to find a deal that will help Greece avert default and stay in the euro area ended in acrimony, sending shares lower yesterday. The region’s finance chiefs next meet June 18.
Investors are also watching for cues on the timing of a U.S. rate increase, with Federal Reserve officials starting a two-day meeting today. While policy makers are expected to leave rates unchanged this month, some improving economic reports have stoked concern the Fed will go ahead with raising them later this year. A release today showed housing starts in May capped the best back-to-back readings since 2007.
Among shares active on corporate news, Ladbrokes Plc rose 4.4 percent after Morgan Stanley raised its rating on the shares to overweight, similar to buy.
Air France-KLM Group slipped 3.4 percent after saying it will review investment plans and scrap some routes. Coloplast A/S plunged 7.9 percent after the company lowered its forecasts for revenue growth and profit margin.
Ashtead Group Plc lost 2.7 percent as the equipment-rental company forecast capital expenditure of more than 1 billion pounds ($1.6 billion) in the coming year.