European Equities Playing Catch-Up Advance The Most in Two Weeks

  • Almost all regional benchmark equity indexes increase
  • DAX posts one of smallest gains as Deutsche Bank falls further

European Stocks Rally With 1% Gain on Stoxx 600

European stocks recovered some lost ground after their worst weekly slides in three months, with commodity producers surging the most in two months.

The Stoxx Europe 600 Index climbed 1 percent, rebounding from a six-week low. That’s a welcome recovery after the gauge’s slide last week made it diverge by the most relative to U.S. shares since early December. The Stoxx 600, down 6.7 percent this year, is lagging far behind the S&P 500 Index and MSCI Asia Pacific Index, which are both up.

While the Monday advance lifted all Stoxx 600 industry groups, gains were the most pronounced in miners, energy producers and automakers. The rebound in commodities sent companies from BHP Billiton Ltd. to Anglo American Plc up more than 3.5 percent, while Total SA gained 2.7 percent as oil rose. Automakers jumped the most in almost six weeks after their worst weekly slides since April.

“People are looking for pockets of value in a very technically-driven market, and that means European equities have a lot of catching up to do,” said Alan Higgins, chief investment officer at Coutts & Co. in London. His firm oversees 14.6 billion pounds ($19 billion). “It’s difficult to find a narrative right now. Fears about the Fed increase and then dissipate, and all you can do is try to follow that news flow. The Fed is very aware of what the market is looking for and hopefully we’ll get no policy shock this week.”

European stocks rebounded after posting their first back-to-back weekly losses since June, failing to maintain a rally that had briefly erased the declines triggered by the U.K. secession vote. Banks have showed renewed signs of weakness, while record outflows from European equity funds deepened to 32 consecutive weeks, adding up to about $87.5 billion being pulled out this year.

Now all eyes are turning to this week’s Federal Reserve meeting, with economists and investors expecting the central bank to keep its policy unchanged. December is the first meeting with at least even odds of an interest-rate increase.

On Monday, the U.K.’s FTSE 100 Index climbed 1.5 percent, posting one of the best performances among western-European markets, thanks to the gains in miners. France’s CAC 40 Index rose 1.4 percent, also helped by a 2.5 percent rise in PSA Group, the maker of Peugeot and Citroen cars. Catering company Sodexo SA gained 2.5 percent after a double upgrade by Raymond James Financial Inc.

Benchmark gauges of Portugal and Italy climbed more than 1.2 percent, while Germany’s DAX Index advanced 1 percent for one of the smallest increases in the region. Deutsche Bank AG, which sank the most since the aftermath of the Brexit vote on Friday, lost another 2.4 percent. Deutsche Wohnen AG fell 1.5 percent after Bank of America Corp. lowered its rating on the residential landlord to the equivalent of a sell, mentioning weakening investor confidence in the industry.

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