Rally Lifts Europe Stocks as FTSE 100 Flirts With All-Time Highby and
A broad-based advance led European stocks to their biggest gain in almost two weeks and pushed the U.K.’s FTSE 100 Index within reach of an all-time high.
The Stoxx Europe 600 Index added 0.8 percent at the close, capping its longest stretch without losses in almost a year. The FTSE 100 closed 0.4 percent away from its 2015 record close, after surpassing it in intraday trading. British exporters rallied after updates on the process of the country’s withdrawal from the European Union sent the pound to a three-decade low versus the dollar, even weaker than its post-referendum level.
Optimism is slowly returning to the market, after euro-area economic data began beating forecasts again and concern over lenders eased. The Stoxx 600 is going for a sixth straight day without losses, and earnings from more than 150 firms are due this month.
“The falling pound has benefited U.K. equities and has been good for the U.K.’s exporters,” said Pierre Mouton, who helps oversee about $8.5 billion as a fund manager at Notz, Stucki & Cie. in Geneva. “The economic numbers are OK in Europe. The next three to four weeks will be very important, with companies giving their results for the quarter.”
The Stoxx 600 is resuming an advance after a rally of as much as 14 percent from a June low ran out of steam in early September. The benchmark has climbed in October in five of the past six years. Profits at its members are forecast to drop 4.2 percent this year, before posting double-digit growth in each of the following three years.
“We are at a very important potential turning point for European equities,” said Michael Kapler, a fund manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “We will hopefully see some earnings growth. But then there is potential for disappointment if this doesn’t come through.”
Most industry groups advanced on Tuesday, as did western-European markets. The FTSE 100 rose 1.3 percent for one of the best performances among regional benchmarks, with the International Monetary Fund becoming the latest forecaster to upgrade its outlook for the country’s economy this year.
Automakers led gains on the Stoxx 600, sending Germany’s DAX Index up 1 percent as markets there reopened after a holiday. Deutsche Bank AG rose 1.5 percent, extending a fourth day of advances. Gains of at least 2.8 percent in Renault SA and PSA Group boosted France’s CAC 40 Index by 1.1 percent. Energy producers also climbed, following crude higher.
Among stocks active on corporate news, LVMH Moet Hennessy Louis Vuitton SE rose 3 percent after it agreed to buy an 80 percent stake in suitcase maker Rimowa. Ryanair Holdings Plc lost 2.4 percent after saying sustained weakness in the pound may curb demand from British travelers for destinations including Spain.