European Stocks Rise as Oil Boosts Energy Producers, Miners Gainby and
Autos, miners, oil companies post biggest gains on Stoxx 600
Vivendi climbs as Vincent Bollore’s company raises stake
European stocks rose for the first time in four days as a surge in crude propelled energy companies higher and automakers rose on signs the region’s economy is improving.
The Stoxx Europe 600 Index added 0.7 percent to 341.98 at the close of trading, reversing an earlier drop of as much as 0.6 percent. Total SA and Royal Dutch Shell Plc led oil stocks to the best performance of the 19 industry groups on the equity benchmark, while Rio Tinto Group and BHP Billiton Ltd. pushed commodity producers higher. Daimler AG, Volkswagen AG and BMW AG paced gains in carmakers. All major western-European markets climbed, with Italian and German shares leading.
Oil jumped to a one-year high in London after Saudi Arabia expressed optimism that OPEC will come to an output arrangement with other producers and Russia said it would back a deal. Upbeat economic reports also helped stocks today; Italian industrial production unexpectedly increased for a second month in August, supporting expectations of a recovery ahead of a key referendum for Prime Minister Matteo Renzi’s government. Data on German and French output last week also came in ahead of forecasts.
“Russia’s comments on supporting an OPEC deal are creating positive sentiment,” said Samy Chaar, chief economist at Lombard Odier in Geneva. His firm manages about $170 billion. “Automakers are rising with other cyclicals because risk appetite improved thanks to better economic data and the oil story also helped give it a boost.”
Investors are also awaiting the upcoming reporting season for indications of the health of corporate Europe, with companies including LVMH Moet Hennessy Louis Vuitton SE and Givaudan SA among the first to release third-quarter earnings this week. While the average of analyst forecasts compiled by Bloomberg estimate a 4.2 percent contraction in annual profit for Stoxx 600 members, some are more sanguine.
“The companies we have talked to especially in industrial and leisure said their businesses are doing well,” said Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna. His firm manages about 30 billion euros ($33.5 billion).
European shares last week capped their fourth weekly decline in five, after a rally from a June low petered out in early September. Investors withdrew money from the region’s equity funds for a record 35th week as of Oct. 5, a report from Bank of America Merrill Lynch showed on Friday.
Goldman Sachs Group Inc. has warned that political risks, exacerbated by a weak economy in Europe and high stock prices in the U.S., make European and U.S. markets vulnerable to declines in the next three months. The firm projects that the S&P 500 Index and the Stoxx 600 will each drop by about 2 percent by December.
Among stocks moving on corporate news today, William Hill Plc climbed 2.8 percent after the U.K. bookmaker announced it’s in talks on a possible combination with PokerStars owner Amaya Inc. of Canada. Vivendi SA added 1.8 percent after Vincent Bollore’s investment company raised its stake in the French media conglomerate to more than 20 percent.
Deutsche Bank AG rebounded 3.4 percent as Austrian Finance Minister Hans Joerg Schelling said that the German lender should be able to “solve the problems with the United States” and that a punishment of $10 billion would be too much.
Ingenico Group SA slid 1.7 percent after Barclays Plc cut its rating of the French payments processor to equal weight, similar to hold, from overweight, citing tougher competition.
(An earlier version of this story corrected the time period for earnings forecasts in the fifth paragraph.)