European Stocks Pare Rebound as Oil Hurts Central Bank Optimism

  • Vestas Wind rises on speculation U.S. plans will boost orders
  • Anglo American leads miners lower as base-metal prices slide

European Stocks Close Little Changed After Early Gains

European stocks pared a rebound from their worst week since February as sliding oil prices subdued investor optimism over continued central bank support.

Vestas Wind Systems A/S climbed 3 percent after Barclays Plc said new U.S. tax plans would fuel a surge in orders. Anglo American Plc and ArcelorMittal tumbled more than 12 percent, dragging mining stocks to the worst performance of the 19 industry groups on the Stoxx Europe 600 Index, as base-metal prices slid after disappointing Chinese trade data. Tullow Oil Plc lost 5.4 percent, leading energy companies lower, as crude fell amid waning concern over output disruptions from wildfires in Canada.

The Stoxx 600 advanced 0.5 percent to 333.22 at the close of trading, trimming earlier gains of as much as 1.4 percent. The index still posted its biggest advance since April 19. Germany’s DAX Index jumped 1.1 percent, among the largest increases of western-European markets, as data showed factory orders in Europe’s biggest economy picked up in March. Another release showed China’s imports and exports declined in April for an 18th consecutive month.

“The data that we’ve seen in Europe is okay -- we had better factory data in Germany -- and in the U.S. the jobs report doesn’t suggest any urgency for the Fed to proceed with rate hikes,” said Samy Chaar, a Geneva-based strategist at Lombard Odier, which manages $173 billion. “Even though Chinese data is hard to get excited about, at least you can start to get comfortable that there’s no collapse, the fears of hard landing are dissipating.”

The Stoxx 600 closed down 0.4 percent on Friday, but pared intraday lows after disappointing U.S. payrolls data added fuel to the argument against a Federal Reserve interest rate increase in June. Traders are now pricing in little chance of higher borrowing costs next month, with December the first month with more than even odds of a hike in rates.

European stocks have slipped since reaching a three-month high in April as investors questioned the strength of the recovery amid declining corporate profits, disappointing economic data and concern about the efficacy of central-bank stimulus. 

Among other shares moving on corporate news today, G4S Plc rose 4.8 percent after saying that revenue rose 4.5 percent. Brenntag AG tumbled 5.8 percent after the world’s largest distributor of chemicals reported first-quarter profit that missed analyst estimates.

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