BLBG: Europe Stocks Climb Second Day on China Support, Led by Autos
Carmakers and commodity producers lead broad-based advance
Amlin soars as MS&AD Insurance agrees to buy the insurer
European shares posted a broad-based rally as China led gains in global equities amid speculation that state support will limit its market turmoil.
All 19 industry groups on the Stoxx Europe 600 Index rose, with carmakers and miners leading the advance. Daimler AG, BMW AG and Volkswagen AG rose at least 2.6 percent. Commerzbank AG added 6.9 percent after JPMorgan raised the German lender to overweight, similar to buy, from neutral, and added it to its list of top picks among European banks. Amlin Plc soared 33 percent after MS&AD Insurance Group Holdings Inc. agreed to buy the Lloyd’s of London insurer. Rio Tinto Group contributed the most to gains in a gauge of miners, rising 2.4 percent after giving a bullish assessment of China’s steel and copper demand.
The Stoxx Europe 600 Index advanced 1.9 percent to 361.61 at 12:27 p.m. in London. Shares rebounded Monday from the previous week’s decline, with miners leading gains, helped by reassurances from China’s central bank governor that stability would return to markets. Chinese stocks rallied Tuesday for the first time in five days on speculation state-backed funds purchased shares after a weak trade report.
“Concerns about a slowdown are still there, but now the market thinks the Chinese government will provide more support,” said John Plassard, senior equity sales trader at Mirabaud Securities in Geneva. “We’re going to see in the next few days some short squeeze in the market, from people closing their short positions before the Fed decision. The sectors that are the most impacted are those that suffered the most, and that’s why you see financials, energy, autos higher.”
Investors are also awaiting next week’s Federal Reserve meeting on interest rates. Traders are pricing in a 30 percent chance that officials will raise borrowing costs at the September gathering, down from almost even odds before China’s currency devaluation Aug. 11.
A report showing the euro-area economy grew more than forecast in the second quarter also buoyed sentiment today.
Among stocks moving on corporate news, Telefonica SA added 1.8 percent after people with knowledge of the matter said the wireless provider is in talks to rent mobile-phone towers in Mexico from America Movil SAB’s Telesites unit to help lower the costs of improving coverage.
RWE AG led utilities higher, rising 6.6 percent after Kepler Cheuvreux raised its recommendation on the German company to hold. Glencore Plc added 2.8 percent as JPMorgan Chase & Co. raised its rating.
Berkeley Group Holdings Plc climbed 2 percent after reiterating its dividend milestone target for September 2018. Whitbread Plc fell 2.7 percent after reporting sales at its Premier Inn division missed estimates.
Societe Television Francaise 1 slid 5.8 percent after French Foreign Minister Micheal Sapin said the government should consider reintroducing evening advertisements on state-owned television.
