Biggest Surge in Banks Since 2011 Sends Europe Shares Up 4th Day

  • All industry groups rise; Italy leads the region's markets
  • The U.K.'s FTSE 100 has erased annual losses, joining the U.S.

A Bullish Equities View With BlackRock's Richard Turnill

Europe’s equities climbed the most in a month, with banks posting their biggest surge since October 2011, on optimism that China’s economy is stabilizing.

Commodity producers led gains after data showed that China’s exports jumped the most in a year and declines in imports narrowed. The U.K. market, rich in miners, advanced, with the FTSE 100 Index turning positive for 2016. The region’s lenders, which suffered the most in the first quarter, surged 6.3 percent as a group.

The Stoxx Europe 600 Index climbed 2.5 percent, with more than 500 of its members rallying. The gauge is extending a rebound after posting four consecutive weeks of losses, the longest run since 2014.

“It seems investors’ appetite is coming back,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “The commodity sector is well supported after the good numbers out of China, and the talks getting close to a solution in Italy give a little support to the market too.”

Yet Galliker highlighted that the market remains fragile and sentiment could turn quickly if earnings reports disappoint. The Stoxx 600 has been trading in a tight range for the past month, after halting its rebound since the Feb. 11 low. The gauge trades at 15.1 times estimated profits, near a one-year low relative to the Standard & Poor’s 500 Index.

Britain’s FTSE 100 has been Europe’s market leader this year, helped by the surge in commodity companies and a weaker pound. It joined developed markets from New Zealand, Canada and the U.S. in erasing annual losses.

The benchmark index advanced 1.9 percent on Wednesday, with Anglo American Plc, Rio Tinto Group and BHP Billiton Ltd. up more than 7.5 percent. Lenders Standard Chartered Plc and Barclays Plc also rallied more than 7 percent. Berkeley Group Holdings Plc rose 2.7 percent after London’s biggest home builder won approval to develop as many as 652 homes at a parking lot in the west of the city.

Italy’s FTSE MIB Index was the biggest gainer among markets in western Europe, up 4.1 percent. Banca Monte dei Paschi di Siena SpA, Banca Popolare dell’Emilia Romagna SC and UniCredit SpA rallied more than 10 percent. The nation came up with a plan to help the troubled firms, which led the industry down at the beginning of the year.

Elekta AB climbed 7.2 percent after the Swedish maker of medial equipment named a new chief executive officer. Axa SA rose 6.5 percent after people with knowledge of the matter said France’s largest insurer is in talks to sell most of its U.K. life-insurance and wealth-investment units. Standard Life Plc, up 3.7 percent, is bidding for its platform that helps U.K. independent financial advisers manage clients’ investments, they said.

Premier Foods Plc tumbled 27 percent, the most since October 2011, after McCormick & Co. abandoned plans to make a takeover bid for it, saying the U.K. company’s board wants too high a price. Tesco Plc sank 7.8 percent after saying profit this year will be held back by the cost of improving its product range. WH Smith Plc fell 1.4 percent after reporting a gross margin and revenue that misses analysts’ estimates.

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