Tuesday, 20 Oct 2020

European stocks rebound as Germany outperforms

(Reuters) – European stocks swung to positive territory on Thursday, with a jump in shares of Lufthansa and Bayer helping Germany outperform as investors weighed the economic risks of a number of upturns in coronavirus infections.

After falling as much as 1.2% earlier in the session, the pan-European STOXX 600 edged up 0.3%, led higher by automakers .SXAP, utilities .SX6P and healthcare .SXDP companies.

Germany’s DAX .GDAXI gained 0.8%, boosted by a 1% rise in Bayer AG (BAYGn.DE) after it agreed to pay as much as $10.9 billion to settle U.S. lawsuits claiming that its widely used weedkiller, Roundup, caused cancer.

Daimler (DAIGn.DE), Volkswagen (VOWG_p.DE) and BMW (BMWG.DE) rose between 1.6% and 3%, also helping the auto-heavy DAX.

The top gainer on the STOXX 600 was Lufthansa (LHAG.DE), which surged 15.1% after its top shareholder dropped his objections to a 9 billion euro ($10 billion) government bailout for the German airline.

“Germany has definitely been a bright spot in terms of recovery. I think that the depth of the recession is probably shallower than initially anticipated,” said Roger Jones, head of equities at London & Capital.

“In terms of getting back to normal, the big question is what the job numbers will be. That’s a crucial point.”

Markets were weighed down earlier this week by a surge in the number of coronavirus cases globally, prospects of a fresh trade tussle between the United States and the European Union and worrying forecast for global economy.

After upbeat June business activity readings for the euro zone, data released on Thursday showed a gauge of German consumer morale improved heading into July.

Among other individual movers, budget airline easyJet (EZJ.L) fell 5.5% after it raised about 419 million pounds ($520 million) through a share placement to help bolster its finances.

German payments company Wirecard (WDIG.DE) slumped 12.7% as it said it was filing to open insolvency proceedings after disclosing a $2.1 billion financial hole in its accounts.

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