European shares rise on optimism of recovery
Published 24/09/2015 | 02:30
Optimism that Europe's economy is recovering and a gain in commodities spurred a rebound in the region's shares after their worst decline in a month.
The Stoxx Europe 600 Index gained 0.5pc at 3:05 pm in London after a report showed the Eurozone economy probably maintained its 0.4pc rate of expansion in the third quarter and will continue to grow.
Shares pared some gains in afternoon trade after European Central Bank President Mario Draghi said the ECB needs time to consider whether risks to the economic outlook warrant a step-up in stimulus.
By mid-afternoon in Dublin, the ISEQ Overall Index was up 0.58pc, or 36.75 points, to 6,396.03.
The leaders included insurance group FBD, which increased 0.8pc to €6.50, while building materials group CRH was up 0.7pc to €6.50.
On the other side of the board, the mid-afternoon laggards included bookmakers Paddy Power, which was down 0.7pc to €103.05, while drinks group C&C fell 0.6pc to €3.50.
"European data have been reasonable," said James Buckley, of Baring Asset Management in London.
"Investors have been favouring more domestic European stocks, and I expect this trend to continue. We have sold off quite heavily, and we could have a day or two more of gains."
Energy stocks led the advance as the price of oil increased, while carmakers rebounded after their worst two-day drop since 2008.
Volkswagen added 5.6pc after closing at its lowest price since 2011.
Europe's benchmark gauge is rebounding after tumbling 3.1pc on Tuesday, the most since the August 24 sell-off - its worst since 2008.
A rout in carmakers after Volkswagen admitted cheating on pollution controls was the latest headwind to hit the region's shares.
The benchmark index closed down 16pc from its April record, giving up almost all of its gains for 2015.
The Stoxx 600 earlier fell as much as 0.5pc after a report showed that a Chinese manufacturing gauge slid to its lowest level in more than six years. It also rallied as much as 1.2pc.
Elekta jumped 6.8pc after a report that it could exceed its target for 450m kronor ($53.5m) in cost reductions in the next two years.
PostNL rallied 7.6pc after Bank of America recommended buying the stock. Smiths Group gained 0.7pc after reporting an increase in profit.
On currencies, the euro climbed against most of its major counterparts as European Central Bank Governing Council member Ewald Nowotny said he's wary of increasing monetary stimulus any time soon.
The common currency rose from a three-week low versus the dollar as Mario Draghi told the European Parliament that the central bank's bond-buying plan "has sufficient built-in flexibility".