European equities rally on mining stock rise

European equities rallied on Wednesday as mining stocks rose and Deutsche Bank climbed 2 per cent off a record low – the German lender's misfortunes had been weighing on sentiment earlier in the week.

Wall Street stocks fell and the dollar rose after Federal Reserve chairwoman Janet Yellen said the majority of the central bank's policy-setting group sees an interest-rate increase as likely needed this year.

Dublin

The Iseq index climbed 0.8 per cent, as its biggest stocks posted modest climbs and banking stocks enjoyed some relief after a recent spell of pressure. Volumes were “average at best”, one trader said.

Origin Enterprises rose 3.4 per cent to €5.70 on a day in which it published full-year results that showed a 28 per cent drop in underlying profits and 4.3 per cent rise in revenues. This was in line with analysts’ expectations.

Ryanair recovered some ground after a poor period of late, rising 0.9 per cent to €12.53, while building materials group CRH added 1.6 per cent, closing at €29.84.

Permanent TSB, which closed slightly down at €1.90, successfully raised €500 million of five-year debt at a cost of approximately 0.25 per cent.

London

The FTSE 100 index bounced back from a one-week low on Wednesday as engineering firm Smiths Group surged after posting higher-than-expected profits and miners tracked stronger metals prices.

The index of blue-chip shares closed 0.6 per cent higher, after falling to a one-week low in the previous session. Smiths Group rose more than 4 per cent as improved sales at two of its units, as well as cost cuts, helped it to beat analysts’ full-year revenue and pretax profit forecasts.

Mining companies were the top risers, with the sector index rising 1.4 per cent. Rio Tinto, Anglo American and BHP Billiton rose between 0.8 per cent and 2.7 per cent as prices of major industrial metals advanced.

TUI advanced 1.3 per cent after the holiday company lifted its core profit guidance for 2015-16, helped by strong demand from British tourists and a lower exposure than competitor Thomas Cook to Turkey, which has been hit by security fears.

Royal Bank of Scotland’s $1.1 billion settlement to resolve claims in the United States that it sold mortgage-backed securities to credit unions did not weigh on its shares, which were up 1 per cent.

British grocer Sainsbury fell 3 per cent, the worst performer in the FTSE 100 index, with its shares falling below its pre-Brexit vote levels after reporting another drop in quarterly underlying sales.

Europe

The Stoxx 600 rebounded on Wednesday in a broad advance that took almost 500 of its shares up. The benchmark gauge rose 0.7 per cent, as struggling German lender Deutsche Bank rebounded 2 per cent from a record low as it agreed to sell its UK insurance unit and chief executive John Cryan ruled out a capital increase.

Germany's Dax Index climbed 0.7 per cent, snapping a three-day losing streak. Deutsche Post added 0.8 per cent after it agreed to buy London-listed UK Mail Group, which rallied 43 per cent.

French group Total pushed energy stocks ahead as oil traded near $45 a barrel, and in Paris, the Cac 40 index rose by 0.8 per cent, boosted also by automaker stocks and banks.

Italy’s FTSE MIB index posted its first increase in four days, rising 0.5 per cent.

US

On Wall Street, the SandP 500 Index extended its biggest monthly decline since January, while the dollar advanced against most major currencies and oil prices rose on speculation that oil-producing countries may agree on a proposal to cut supply. Equities struggled for direction as oil and gas companies swung with crude prices.

AT&T dropped 1.7 per cent after an analyst downgraded the shares, dragging phone companies lower.

Shares of JPMorgan, Bank of America and Citigroup were down between 0.2-0.5 per cent, as Ms Yellen said the Fed was considering changes to its annual stress tests.

The healthcare sector weighed the most on the S&P 500 index as Bristol-Myers and Amgen fell 1.2 per cent each.

Nike fell 3.1 per cent as future orders disappointed, and McDonald’s sank the most in five weeks.

– (Additional reporting: Bloomberg / Reuters)