Tesco shares up after supermarket giant reports forecast-beating U.K. sales
LONDON (MarketWatch) -- European shares ended higher Tuesday in a volatile session, as a turnaround for oil majors, strong gains from U.K. supermarket giant Tesco and a possible merger for British Airways countered more losses for mineral extractors.
The pan-European Dow Jones Stoxx 600 index rose 1.7% to 197.20, buoyed by oil producers like France's Total , which rose 2.9%, and banks including Banco Santander , which rose 6.5%.
Underscoring the volatility, however, at one point in the session every sector traded in the red. And on Monday, stocks slumped after dismal manufacturing data from the U.K., Europe, the U.S. and China showed a sharper-than-expected drop-off activity.
On Tuesday, data showed industrial producer prices across the 15-nation euro zone dropping 0.8% in October. Economists were forecasting a 0.3% monthly drop.
"As we are in the midst of the largest market fall since the Great Depression, it's an understatement that the outlook is extremely uncertain," said European equity strategists at J.P. Morgan.
With investor confidence at a record low, they said, "one does not get paid to be bearish on equities in 2009" and advised buying on dips.
On a national level, the German DAX 30 index ended with a 3.1% rise to 4,531.79.
The U.K. FTSE 100 index added 1.4% to 4,122.86 and the French CAC-40 index advanced 2.4% to 3,152.90.
U.S. stocks rose at the open on Tuesday, a day after the Dow industrials saw their fourth-biggest point drop on record, as investors turned to prospects for a bailout of the ailing auto industry. See U.S. Market Snapshot. See story on autos.
Tesco shines
Tesco is one company that appears to be coping in a tougher environment.
Shares of the British supermarket giant jumped 13% after 13-week total sales rose 11.7% and U.K. comparable sales advanced a forecast-beating 2%. See Tesco story.
"The results were reassuring across the board," noted analysts at Credit Suisse.
Continental rivals also advanced, with Delhaize up 4.6% in Belgium.
British Airways shares surged 12.5% after it said it's holding merger talks with Australia's Qantas Airways.
At the same time, British Airways is continuing talks with Spain's Iberia . Iberia shares climbed 9.5%.
Royal Bank of Scotland shares stood out in the banking sector, up 16.8% after Merrill Lynch started coverage on the lender with a buy recommendation.
"The investment case for RBS rests on a view that it has the options and the appetite to restructure next year," the broker said.
Deutsche Telekom ) shares climbed 6.3%.
Chief Financial Officer Karl-Gerhard Eick will leave the firm next year to work for another company. Eick has been CFO of the firm since 2000.
Retailer Arcandor , where Eick reportedly will get the chief executive spot, added 13.9%.
Deutsche Boerse closed with a loss of 5.3% after reporting that its Eurex derivatives unit traded 24% fewer contracts in November than in October.
