BP and Tullow Oil trade higher; EasyJet carries more passengers in June
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares traded sharply higher Tuesday, with commodity-sector stocks putting in a strong performance, as investors picked up shares in companies recently battered by worries about economic growth.
The Stoxx Europe 600 index (ST:SXXP 242.78, +6.10, +2.58%) jumped 2.6% to 242.78. On Monday the benchmark closed down 0.3%, its lowest level since May 25.
"I think that markets were very oversold and I don't think that the [economic] background is as bad as the markets were leading us to believe,
" said Mike Lenhoff, chief strategist at brokerage Brewin Dolphin.
Investors were buying up shares in companies leveraged to economic growth on Tuesday, such as miners.
Xstrata (UK:XTA 898.90, +47.90, +5.63%) shares rallied 5.6% while Vedanta Resources (UK:VED 2,202, +102.00, +4.86%) moved up 4.9% as metal futures climbed following a decision by the Australian central bank to keep rates on hold earlier Tuesday.
"Given that we're oversold, given the valuations, given that the major central banks are happy to keep interest rates where they are, I think that's a very supportive backdrop and very helpful for the equity markets," said Lenhoff.
The French CAC-40 index (FR:PX1 3,439, +106.31, +3.19%) rallied 3.2% to 3,438.78, while the U.K.'s FTSE 100 index (UK:UKX 4,940, +116.14, +2.41%) climbed 2.2% to 4,939.49 and the German DAX index (DX:DAX 5,959, +143.07, +2.46%) jumped 2.4% to 5,957.91.
The advance followed Asian shares trading broadly higher, while U.S. stock futures pointed to an early advance for Wall Street coming off the three-day weekend, with Dow Jones Industrial Average futures up 110 points.
In the currency markets, the euro (CUR_EURUSD 1.2577, +0.0040, +0.3191%) rose 0.5% to $1.2583 and sterling (CUR_EURUSD 1.2577, +0.0040, +0.3191%) climbed 0.5% to $1.5175 against the dollar.
Sentiment also improved toward oil production and exploration firms, with Tullow Oil (UK:TLW 1,083, +42.00, +4.04%) shares up 3.9% after stating that it sees fiscal-year working interest production in line with expectations.
Also higher, shares of BP (UK:BP. 343.45, +10.15, +3.05%) (BP 31.16, +1.81, +6.17%) jumped 2.9%, reflecting hopes the oil giant's battered stock price may discount the costs of the Gulf of Mexico oil spill and attract new shareholders. Read more on BP.
Banks climbed as well, notably for lenders with big exposure to the more peripheral regions in Europe, with shares of France's Credit Agricole (FR:ACA 8.61, +0.46, +5.59%) trading up 5.7% and Spain's Santander (ES:SAN 9.15, +0.46, +5.33%) (STD 11.47, +0.55, +5.04%) rising 5.5%.
Tui (DE:TUI1 7.56, +0.62, +8.10%) , up 9%, said it expects its 43.33% stake in Hapag-Lloyd to generate higher profit contributions than initially forecast, due to a recovery in global container shipping.
Transport volumes and in particular freight rates have continually improved over recent months and are up considerably on a year-on-year basis. Prospects for core business tourism remain unchanged, it added.
SMA Solar Technology (DE:S92 98.10, +13.50, +15.96%) shares jumped 16.3%.
The firm raised its 2010 forecast, with sales now expected in a range of 1.5 billion euros to 1.8 billion euros, from a previous forecast of 1.1 billion euros to 1.3 billion euros.
SMA said it achieved sales of over 800 million euros in the first six months 2010 and now expects stronger worldwide market growth for the year.
Other solar firms on the move included Q-Cells (DE:QCE 5.57, +0.23, +4.39%) , up 6.1% and SolarWorld (DE:SWV 10.40, +0.55, +5.63%) , up 6.4%.
Zodiac Aerospace (FR:ZC 39.53, +2.65, +7.17%) shares jumped 7% after an upgrade to buy from hold at Societe Generale.
The broker noted that the firm's shares have retreated 8% over the last month, but it believes that increasing air-traffic growth should mean that activity continues to gain momentum and that expected earnings per share enhancement from recent deals "makes the share a useful recovery play."
Infineon Technologies (DE:IFX 4.99, +0.24, +5.03%) shares rose 5%. Bank of America's Merrill Lynch unit upgraded the microchip maker to neutral, from underperform, the Financial Times reported.
