- Thomas Cook, Lufthansa lead gains in travel-related shares
- U.S., Germany call on Russia, Turkey to deescalate tensions
European shares rebounded from their biggest drop in almost two weeks as investors turned their attention from the Middle East to the prospects for further central bank stimulus and the improving U.S. economy.
Travel-and-leisure shares were among the best performers on the Stoxx Europe 600 Index, with Thomas Cook Group Plc jumping 11 percent after full-year earnings beat estimates and it said demand is holding up despite recent terror attacks. Deutsche Lufthansa AG rose 2.7 percent after cabin crew called off strikes for this week. Better-than-expected dividend announcements pushed LafargeHolcim Ltd., Metro AG and Swiss Life Holding AG up at least 3.7 percent.
The Stoxx 600 rose 1.4 percent to 380.84 at the close of trading. While Russia intensified criticism of Turkey a day after Turkish fighters shot down a Russian warplane, President Vladimir Putin ruled out any military retaliation as U.S. and German leaders called for an easing of tensions.
“Until tensions really blow up, then markets can cope with geopolitics,” said Rosamunde Price, who helps oversee about $14 billion as chief investment strategist at Seven Investment Management in London. “The assumption is that the big players won’t go to war over this, so they’ll have to sort it out. The focus is turning once again to evidence that the U.S. economy is doing well, which takes the edge off any market jitters.”
Equities slid yesterday after the warplane was shot down. The Stoxx 600 had gained 13 percent from its low in September by the end of last week on optimism that the European Central Bank will add to its stimulus program and that higher U.S. interest rates won’t hamper growth.
“The prospect of more stimulus measures from the ECB’s meeting next week has also helped to boost Europe’s equity markets today,” said Steven Santos, a broker at Banco de Investimento Global SA in Lisbon.
While U.S. data today showed weaker-than-expected consumer spending in October, separate reports indicated orders for durable good rose in October more than forecast, a measure of services activity improved in November, and purchases of new homes rebounded last month. Traders are pricing in a 74 percent probability that the Federal Reserve will increase rates in December amid growing investor confidence that the world’s largest economy is strong enough to cope with higher borrowing costs.
Among stocks moving on corporate news today, K+S AG rose 7.7 percent on a report that Potash Corp. is working on a new takeover offer for the fertilizer maker.
U.K. builders Persimmon Plc and Taylor Wimpey Plc added at least 3 percent, as Chancellor of the Exchequer George Osborne announced an affordable-house building program in his Spending Review presentation to Parliament.
Banco Santander SA, Spain’s largest bank, fell 2 percent and Banco Popular Espanol SA dropped 2.5 percent amid concern that creditor-protection proceedings for Abengoa SA may leave lenders with losses. The national renewable-energy company tumbled 54 percent to a record low.