- Popular leads lender declines after announcing share sale
- Daily Mail drops as weak print advertising demand hurts profit
European stocks were little changed, after their biggest two-day rally since February, as advances in carmakers and miners offset a drop in banks.
ArcelorMittal jumped 6.9 percent, leading commodity producers higher, on speculation the European Commission may widen an investigation on dumping of steel imports to include more countries. Auto-related shares posted the biggest gains among industry groups, with PSA Peugeot Citroen and Renault SA up more than 2.5 percent. Banco Popular Espanol SA plunged 26 percent after saying it will raise about 2.5 billion euros ($2.79 billion) by selling new shares.
The Stoxx Europe 600 Index closed 0.1 percent higher, erasing an earlier slide of as much as 0.3 percent. The benchmark advanced 3.5 percent in the past two sessions, buoyed by optimism that the U.S. economy can withstand a potential rate increase in June.
“It’s to be expected after the gains we’ve seen this week,” said Michael Hewson, a market analyst at CMC Markets in London. “The real test is whether or not we can sustain the gains of the last two days. There is a lack of conviction on the part of investors with respect to the overall direction of European stocks. I don’t see where that catalyst is coming from at the moment.”
European shares closed just 0.5 percent below a three-month high reached on April 20. Before this week, a rally that pushed up the Stoxx 600 as much as 16 percent from a February low had stalled amid concern about slowing global growth, Federal Reserve policy tightening and mixed earnings reports.
Traders are pricing in a 30 percent chance of higher U.S. borrowing costs in June after Fed officials indicated willingness to act if the economy shows sustained improvement. That’s up from 4 percent last week. July is now the first month with more than even odds for a rate rise. Fed Chair Janet Yellen is scheduled to speak on Friday after European markets close.
Among other shares active on corporate news, Daily Mail and General Trust Plc tumbled 11 percent after its first-half profit fell, hurt by a weak print-advertising market.