Lender Surge Drives Europe Share Rebound as Deutsche Bank Jumpsby and
Banks post best performance on Stoxx 600 after Tuesday's rout
Carlsberg advances after forecasting higher earnings this year
A surge in banks helped European stocks rebound from their lowest level since 2013 as investor concern over the creditworthiness of lenders eased.
A measure of banks posted the best performance of the 19 industry groups on the Stoxx Europe 600 Index, with Deutsche Bank AG jumping 10 percent as a person familiar with the matter said it is considering buying back some of its debt. Commerzbank AG climbed 8.2 percent. Italy’s Banca Popolare di Milano Scarl and Intesa Sanpaolo SpA gained at least 11 percent.
The Stoxx 600 advanced 1.9 percent to 315.19 at the close of trading, snapping a seven-day losing streak. Global equities have been battered in 2016 in volatile trading amid investor concern over oil prices, earnings, and the strength of the U.S. and Chinese economies. The Stoxx 600 now trades at 13.9 times estimated earnings, about 20 percent below its April 2015 peak.
“When it feels this bad, it’s usually a good buying opportunity,” said Kevin Lilley, who manages European equities at Old Mutual Global Investors in London. His firm oversees about $32 billion. “Valuations look cheap for financials. But, we’ve just been through a huge crisis of confidence and I think a long-term rebound is still very dependent on central-bank policy and global macro data. You’re fighting negative newsflow with very low valuations at the moment, and that’s the trade off.”
The Stoxx 600 briefly extended gains to as much as 2.9 percent after Federal Reserve Chair Janet Yellen signaled that the U.S. central bank won’t rush to raise interest rates amid the turmoil in financial markets, and a report showed oil inventories unexpectedly fell last week. The volume of shares changing hands was 33 percent higher than the 30-day average. A gauge tracking European stock swings fell from its highest in three weeks, although it has still jumped 51 percent this year.
Among stocks moving on corporate news, Carlsberg A/S gained 4 percent after the brewer reported a smaller-than-projected drop in quarterly profit and forecast higher earnings this year.
Smurfit Kappa Group Plc jumped 12 percent, the most since September 2012, after saying it’s considering changing its U.K. stock listing to premium from standard, which would potentially allow inclusion in the FTSE U.K. series of indexes.
Vonovia SE climbed 4.9 percent after failing to get enough shares to acquire Deutsche Wohnen AG following a four-month takeover battle between Germany’s largest property companies. Deutsche Wohnen added 3.9 percent.
Opera Software ASA soared 33 percent after the Norwegian maker of web browsers agreed to sell itself to a group of Chinese technology companies.
Tullow Oil Plc tumbled 8.5 percent after reporting a wider-than-expected full-year loss as sliding crude prices forced the company to record writedowns. A.P. Moeller-Maersk A/S fell 3.6 percent after the shipping company posted an 84 percent plunge in 2015 profit and wrote down the value of its oil assets.
Telenor ASA retreated 6 percent after saying competition in markets such as Thailand and Malaysia will put pressure on 2016 profitability.