European stocks rebounded yesterday as investors decided that the US government shutdown is unlikely to make a fundamental difference to growth.
Shares fell sharply on Monday, but given time to consider the implications of events in Washington, investors returned to equities yesterday, pushing up most markets by around 1 per cent.
"For the moment the shutdown looks more like noise rather than something that makes a fundamental difference for growth," Nicola Marinelli, who helps oversee $180 million as portfolio manager at Glendevon King in London, told Bloomberg yesterday.
Drinks group C&C put in the day's stellar performance, gaining 4.7 per cent to close at €4.179 on the back of a big order for two million shares at €4.15. Dealers pointed out that its price has come in from the "mid €4.30s" in recent weeks and there was a growing belief that it had been oversold.
News that the US helped drive peer Wolseley's strong performance boosted building materials giant CRH, whose shares added 1.78 per cent to end the day at €17.97. Around half the Irish group's earnings come from the US.
Ryanair climbed 1.51 per cent to €6.386. Packaging group Smurfit added almost 1 per cent to €16.89. Irish-focused Providence Resources, which published interim results this week, increased 1.32 per cent to close at €3.85.
The strong presence of mining- and commodity-related stocks on London meant that it underperformed the rest of Europe slightly. Commodity producers across Europe declined 0.9 per cent as gold fell 2.9 per cent and silver dropped 4.2 per cent.
Precious metal miner Fresnillo lost 5 percent to 924.5 pence, while rival Randgold Resources shed 2.5 per cent to 4,338 pence.
Building materials group Wolseley added 3.1 per cent to 3,296 pence, its largest gain in more than five weeks.
Irish-based convenience foods group Greencore, which is only listed in London, added 3.05 per cent to close at 152 pence.
Telecom Italia climbed 5.2 per cent to 64.2 cents, its highest price since May. The telecommunications operator could raise enough funds to boost its domestic business if it sells at least €4 billion worth of shares or its stake in Tim Participacoes in Brazil, according to Goldman Sachs.
Wind turbine manufacturer Vestas jumped 6.8 per cent to 148.50 kroner. Bank of America raised its price estimate to 180 kroner from 150 kroner, predicting that the company will pay off almost all its debt by 2015, earlier than the consensus forecast.
Denmark's second biggest drugmaker, H Lundbeck, rose 2.6 per cent to 123.30 kroner, its highest price in 14 months. The US Food and Drug Administration approved Brintellix, an anti-depressant marketed by the Danish company and Takeda Pharmaceutical.
Unilever slipped 2.8 per cent to €27.94 after saying sales growth slowed as trading in emerging markets deteriorated at a faster rate. Underlying group sales for the three months will rise 3 per cent to 3.5 per cent, the maker of Lipton tea and Dove soap said late yesterday in a statement.
US stocks rose early in the expectation the US government shutdown will be shortlived.
Merck announced a plan to cut annual operating costs by $2.5 billion by the end of 2015 and eliminate 8,500 jobs. Shares rose 1.2 per cent to $48.77. Walgreen reported fourth-quarter earnings that exceeded expectations, helped by a rise in generic drug sales. Shares gained 4.4 per cent to $55.15.
Ford advanced 2.3 per cent to $17.26 after the company reported a 6 per cent increase in its September sales. General Motors edged up 0.1 per cent to $36.02. – (Additional reporting: Bloomberg)