Deutsche Bank Rebound Helps Spark Broad Rally in European Stocks

  • All stock markets in region rise; DAX up after 3-day decline
  • Commodity producers advance as base metal prices increase

European Stocks Rally on Stoxx 600 Rebound

For a seventh time in the last nine days, Deutsche Bank AG and the Stoxx Europe 600 Index moved in the same direction. This time, it was up.

The German lender rebounded from a record low as it agreed to sell its U.K. insurance unit and Chief Executive Officer John Cryan ruled out a capital increase. While Deutsche Bank represents only 0.2 percent of the Stoxx 600, it has been affecting sentiment since the U.S. announced it is seeking $14 billion in settlements. The benchmark gauge rose 0.7 percent at the close. It pared earlier gains of as much as 1.2 percent as investors assessed Federal Reserve Janet Yellen’s testimony to U.S. lawmakers.

After Deutsche Bank’s woes triggered the biggest surge in stock-market volatility since January earlier this week, the Stoxx 600 rebounded on Wednesday in a broad advance that took almost 500 of its shares up. Rio Tinto Group and ArcelorMittal led miners higher as base metal prices gained. Total SA pushed energy stocks ahead as oil traded near $45 a barrel.

“Banks picked up following Cryan’s comments -- that helped sentiment,” said Patrick Spencer, London-based vice chairman of equities at Robert W. Baird, which manages $151 billion. “As banking worries are slowly getting behind us, the risk-on sentiment will be back.”

Deutsche Bank climbed 2 percent after losing a fifth of its value this month through Tuesday. Growing concerns about its capital buffers amid mounting legal costs have hurt the firm, which has become one of the biggest bank losers in Europe this year. The industry, down 24 percent in 2016, has led declines among Stoxx 600 groups.

Germany’s DAX Index climbed 0.7 percent, snapping a three-day losing streak, with Linde AG leading gains after Sanford C. Bernstein & Co. said Praxair Inc. Chief Executive Officer Steve Angel described the industrial-gases company as a “complimentary fit.” Italy’s FTSE MIB Index also posted its first increase in four days, rising 0.5 percent, while automakers and banks boosted France’s CAC 40 Index by 0.8 percent.

Today’s gains pared the Stoxx 600’s monthly loss, following a selloff in banks that dragged it to its worst day since July on Monday. The gauge is down 0.3 percent for September, heading for a 3.9 percent advance this quarter, after a rebound that followed the U.K. secession vote and amid optimism that central banks will maintain loose monetary policies.

“There’s a snap back after the recent selloff,” said Benno Galliker, a trader at Luzerner Kantonalbank AG in Lucerne, Switzerland. “Banks are recovering a bit after staying under pressure, and the oil recovery is helping basic materials.”

Among other stocks moving on corporate news today:

  • TUI AG gained 1.3 percent after raising its forecast for annual-earnings growth to 12 percent to 13 percent from 10 percent.
  • U.K. Mail Group Plc rallied 43 percent after Deutsche Post AG agreed to buy the company for 243 million pounds ($316 million). Deutsche Post added 0.8 percent.
  • J Sainsbury Plc fell 3.9 percent after the U.K. grocer reported slightly weaker sales amid its first ever quarterly decline in clothing revenue.

(In an earlier version of this story, the number of days Deutsche Bank and the Stoxx 600 have moved in tandem was corrected.)

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