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Oil, mining stocks help European shares rebound from losing run

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European shares rebounded on Wednesday after a four-day losing streak, as higher commodity prices helped offset fears around Europe's worsening Covid-19 situation and the prospect of severe restrictions.

The pan-European STOXX 600 index climbed 0.4pc after recording its worst session in nearly two months on Tuesday amid a resurgence in coronavirus cases and fears of rising interest rates.

Oil stocks rose 1.2pc, set for their biggest jump in over a month, with crude prices inching higher as investors remained sceptical about the effectiveness of a US-led release of oil from strategic reserves.

Miners gained 0.8pc, tracking higher copper prices on easing concerns over Chinese demand, while travel stocks slid over 1pc on prospects of harsher travel curbs.

European stocks are on course for weekly losses, as the return of Covid-19 curbs, rate hike and inflation concerns sparked fears of a weaker economic growth outlook.

"There's a two-way pull between macro concerns and what's happening bottoms-up in terms of corporate profits," said Nick Nelson, head of European equity strategy at UBS, adding that while the third quarter has been one of the decade's best reporting seasons for Europe, macro concerns such as a rise in US bond yields and Covid-19 cases have been holding stocks back.

"People are waiting to see what impact Covid measures will have on economic growth in Q4 and next year. If the situation deteriorates and we see more aggressive responses from governments, there will be concerns over the overall European economic growth profile."

Latest Refinitiv data shows profits of companies listed on the STOXX 600 are expected to rise 58.8pc to €102.7bn from a year ago - another drop from last week's 60.4pc estimate, and 60.7pc from the week before that.

Meanwhile, Ifo Institure survey showed German business morale deteriorated for the fifth month running in November, as supply bottlenecks in manufacturing and a spike in coronavirus infections clouded the growth outlook.

Telecom Italia jumped 8.3pc following news reports that KKR is considering boosting its offer for the company after its top investor Vivendi called the initial one too low.

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French catering company Elior Group rose 1.8pc after announcing new targets for its next fiscal year and posting its best quarter since the pandemic began.

German medical equipment maker Draegerwerk plunged 10.9pc after saying it expected sales and earnings to drop next year, citing weak demand for pandemic-related products.


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