European stocks recover after worst weekly slide in three months

European stocks rose on Monday to recover some lost ground after their worst weekly slides in three months, with commodity producers surging the most in two months.

The Stoxx Europe 600 Index climbed 1 per cent, rebounding from a six-week low last week, helped as oil prices surged after fighting engulfed Libya’s key eastern crude-oil ports, delaying shipments over the weekend.

Brent crude oil prices, which rose about 2 per cent to $46.74 (€41.86) a barrel by the time European markets closed, were also underpinned as Venezuela hinted that the Organisation for Petroleum Exporting Countries (Opec) and other major oil producers could agree a deal to stabilise markets for the commodity.

DUBLIN

Irish shares could not join in the broader positive tone across Europe, given the dearth of oil and mining stocks on the Iseq. The index ended the session virtually unchanged at 6,109.16 points.

Indeed, rising fuel costs served to weigh on Ryanair, one of the largest companies on the Dublin market, which lost 1.5 per cent to €13.04.

Banking stocks were mixed, with Bank of Ireland falling 1.1 per cent to 18.6 cents, while Permanent TSB added 1.8 per cent to €1.89.

Bucking the trend, Smurfit Kappa rose almost 1 per cent to €21.61, with analysts at Davy highlighting that rising US prices for containerboard, used to make cardboard boxes, has improved to the extent that will make exports to Europe less competitive.

This “in turn, will help European producers to implement increases in their domestic markets”, Davy said.

Tullow Oil soared by 2.3 per cent in London on the back of rising oil prices.

LONDON

UK stocks rebounded from their second weekly decline as crude and metals prices climbed. Royal Dutch Shell added 1.9 per cent as oil recovered from the lowest close last week in more than a month.

Glencore and Anglo American advanced 5.7 per cent or more as commodities rose.

Builders gained, with Barratt Development adding 1.2 per cent, and Berkeley Group climbing 2.5 per cent as a report showed London house prices rebounded in September.

Mitie Group bucked the trend, plunging 29 per cent – the most on record – after the property-services supplier warned profit this year will miss its target.

The FTSE 100 Index gained 1.5 per cent to 6,813.55 at the close of trading in London.

Shares fell on Friday, capping a 1 per cent weekly drop, as lenders tumbled after Deutsche Bank's rebuff of a US Justice Department claim to settle a probe tied to mortgage-backed securities sparked a selloff in banks across Europe.

EUROPE

Benchmark gauges of Portugal and Italy climbed more than 1.2 per cent, while Germany’s DAX Index advanced 1 per cent for one of the smallest increases in the region.

While the Monday advance lifted all Stoxx 600 industry groups, gains were the most pronounced in miners, energy producers and carmakers.

Carmakers jumped the most in almost six weeks after their worst weekly slides since April.

"People are looking for pockets of value in a very technically driven market, and that means European equities have a lot of catching up to do," said Alan Higgins, chief investment officer at Coutts in London. "It's difficult to find a narrative right now. Fears about the [US Federal Reserve] increase and then dissipate, and all you can do is try to follow that news flow. The Fed is very aware of what the market is looking for and hopefully we'll get no policy shock this week."

A rise in financial stocks, which had slumped on Friday following Deutsche Bank's run-in with US authorities, added the most points to European stock markets. Shares in banks HSBC, Intesa Sanpaolo and Santander rose between 1 and 2.5 per cent.

But Deutsche Bank fell 2.4 per cent, extending losses following an 8.5 per cent slump in the stock on Friday .

Analysts at US bank Citigroup said that, while battered bank stocks represented a tempting investment opportunity, buying into the sector would nevertheless represent the "world's biggest contrarian trade".

Deutsche Wohnen fell 1.5 per cent after Bank of America lowered its rating on the German residential landlord to the equivalent of a sell, mentioning weakening investor confidence in the industry.

NEW YORK

The S&P 500 and the Dow rose on Monday afternoon, lifted by financial stocks, a day before the Federal Reserve holds a meeting to discuss interest rates.

The Fed is expected to leave rates unchanged at the two-day meeting, but investors will assess chair Janet Yellen’s speech on Wednesday for clues on the timing of the next rate hike.

The Dow Jones industrial average was up 0.21 per cent, while the S&P 500 added 0.19 per cent, though the Nasdaq Composite lost 0.02 percent.

Among individual stocks, Casino operator Isle of Capri jumped 30.2 per cent after Eldorado Resorts said it would buy the company for $1.7 billion (€1.5 billion), including debt. Eldorado’s shares fell 2.2 per cent.

General Motors rose 2.9 per cent after Morgan Stanley upgraded the stock to overweight, the equivalent of a buy.