European stocks near two-week high after upbeat PMI data
(Reuters) – European shares rose to a near two-week high on Tuesday, powered by cyclical stocks after latest economic data signalled that business activity in the continent was rebounding faster than expected from a coronavirus-driven slump.
The pan-European STOXX 600 index rose 1.4% as economically sensitive sectors such as banks .SX7P, automakers .SXAP and insurers .SXIP jumped between 2% and 3.5%.
Euro zone stocks .STOXXE rose 1.8% after IHS Markit’s Purchasing Managers’ Index (PMI) showed a historic coronavirus-induced downturn in the bloc eased again in June as businesses reopened after weeks-long lockdowns.
Germany’s DAX .GDAXI jumped 2.3%, France’s CAC 40 .FCHI rose 1.6% and UK’s FTSE 100 .FTSE rose 0.9% after better-than-expected readings.
“It would no longer surprise me if the data is a surprise on the upside,” said Daniel McDonagh, head of European portfolio management team at Pyrford International, part of BMO Global Asset Management.
“The big question still is whether we can proceed on the exit strategy from the lockdown in a smooth manner and really avoid a step backwards.”
After a more than 35% recovery from March lows, the STOXX 600 has traded sideways in the recent weeks as investors remain cautious about a second wave of coronavirus infections that could stall an economic rebound even as central banks and governments inject cash into the ailing economies.
Investors were also relieved as White House trade adviser Peter Navarro walked back from his earlier remarks that the Phase One trade deal with China was “over” and on U.S. President Donald Trump’s confirmation in a tweet the trade deal was fully intact.
Bayer AG (BAYGn.DE) gained 2.2% after a U.S. federal appeals court blocked California from requiring the company to label its glyphosate-based weed killer, Roundup, with a cancer warning.
German metals trader Kloeckner & Co (KCOGn.DE) jumped 20% after it provided positive earnings outlook for the second quarter.
Payments company Wirecard (WDIG.DE), mired in an accounting scandal, bounced 16.3% after shedding more than 140% in the past three sessions.
UK-listed drugmaker Hikma Pharmaceuticals (HIK.L) fell 7% after a major shareholder sold most of its nearly 1 billion pound stake.
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