European Stocks Rally in Last Hour of Trading as Miners Jump

  • Stoxx 600 post three-day gain for first time this year
  • Inflation drops as ECB meets to review policy next week

Stoxx Europe 600 Index Jumps 0.8%

A late-trading rally pushed European equities up for a third day -- the first time it happened this year.

Commodity producers led the surge after China’s central bank cut the amount of cash the nation’s lenders must hold as reserves. Anglo American Plc and ArcelorMittal rallied more than 6.5 percent, helping the Stoxx Europe 600 Index climb 0.7 percent for the day. The gauge reversed a loss of as much as 1.2 percent to trim its monthly slide to 2.4 percent. Separate data showed the euro-area inflation in February turned negative.

“It could be the sort of thing that could help us push higher,” said Jasper Lawler, a London-based market analyst at CMC Markets Plc, referring to the People’s Bank of China move. “Inflation was weaker than expected, which should help the prospect of easing at the March meeting, but I’m not sure what they can do.”

The focus is turning to the European Central Bank meeting next week, after President Mario Draghi signaled policy makers will consider adding stimulus.

Despite the recent rebound, the region’s shares have dropped for a third month, their longest streak since 2012. The Stoxx 600 now trades at 14.5 times estimated profits, up from the low of 13.2 earlier this month. That’s still well below the 17 times hit at its peak last April.

Concern over the efficacy of central-bank stimulus, a deepening oil rout and bad loans at banks have pushed up stock volatility for a second month. An added sign of investors’ lack of faith in the region’s economic outlook is that the gap between cheapest and most expensive European shares has grown to its widest in a decade.

European banks, the worst performers of the Stoxx 600 this year, also fell a third month. HSBC Holdings Plc, Credit Suisse Group AG and Italy’s Banca Monte dei Paschi di Siena SpA all declined more than 1.5 percent on Monday. London Stock Exchange Group Plc, Bolsas y Mercados Espanoles SA and Deutsche Boerse AG declined after rallying last week on merger activity.

Ocado Group Plc, an online retailer in the U.K., plunged 7.8 percent after Amazon.com Inc. stepped up its incursion into the market, signing a deal with Wm Morrison Supermarkets Plc. Morrison climbed 5.9 percent. PostNL NV added 3 percent after confirming its 2016 outlook.

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