European stocks recover as bank shares rebound

Trading remains thin ahead of Opec meeting and Italian referendum this weekend

A trader works  on the floor of the New York Stock Exchange. Photograph: Michael Nagle/Bloomberg

A trader works on the floor of the New York Stock Exchange. Photograph: Michael Nagle/Bloomberg

 

A rebound in bank shares helped European stocks recover from their biggest drop in more than three weeks, while trading remained thin before the upcoming Opec meeting on Wednesday and a widely-feared Italian referendum this weekend.

Discord among Opec members before a key meeting in Vienna sent crude prices and energy shares lower, with Iran and Iraq resisting pressure from Saudi Arabia to curtail oil production in an effort to boost oil prices.

The Stoxx Europe 600 Index added 0.3 per cent at the close, after swinging between gains and losses at least nine times.

DUBLIN

The Iseq index scraped out a 0.25 per cent gain, to 6,224.29, with Permanent TSB and Paddy Power Betfair among the main gainers among larger companies.

Smurfit Kappa pushed 1.5 per cent higher to €21.16 as investors placed bets on the prospect of the group being added to the FTSE 100 index as part of a quarterly review of the blue-chip index, due to be completed on Wednesday.

Analysts calculated that the paper packaging giant is likely to have secured a coveted spot on the index.

Fyffes added 1.5 per cent to €1.48 on reports that UK retailers have started to increase the price of bananas for the first time in five years. Goodbody Stockbrokers analyst Patrick Higgins said the move “suggests progress is being made by suppliers in passing on” price inflation they are grappling with as a result of adverse currency movements.

PTSB advanced 2.4 per cent to €2.57 as the market shrugged off news that the lender has been left to pay a €4.5 million fine as a result of overcharging at its former subprime unit, Springboard.

However, Independent News & Media dropped 2.7 per cent to 11c after the company confirmed its chairman and chief executive had a dispute over the price tag of an acquisition it was eyeing, understood to have been the Newstalk radio station.

LONDON

Britain’s top share index fell on Tuesday, underperforming other European markets as energy and mining stocks were hit by weaker oil and metals prices.

The blue-chip FTSE 100 index, which is more heavily weighted towards commodity-related stocks than continental European indexes, fell 0.4 per cent.

Concern over the prospects of Opec agreeing a meaningful oil production-cuts deal sent the price of the commodity sliding, with West Texas Intermediate crude falling 4 per cent to $45.19 a barrel in New York.

Gold fell and metals including copper, lead and steel slipped on perceptions that a post-US election rally in industrial metals prices had overreached.

Mining companies Antofagasta, BHP Billiton, and Fresnillo were the biggest fallers, down by between 3 and 3.9 per cent. Shares in BP dropped 2.1 per cent while Royal Dutch Shell slipped 2 per cent.

Homebuilders Barratt Development, Persimmon and Taylor Wimpey gained between 1.9 per cent and 2.3 per cent after Bank of England data showed mortgage approvals were stronger than expected in October.

The data also showed lending to Britons expanded last month at the fastest annual pace in 11 years, helping boost consumer-facing stocks such as retailers Next and Dixons Carphone and broadcaster ITV by between 1.8 and 2.7 per cent.

EUROPE

A gauge of banks rose for the first time in five days, with Italy’s UBI Banca SpA and Intesa Sanpaolo among the biggest gainers – even as markets remained nervous ahead of an Italian constitutional referendum on Sunday.

Polls suggest that Italian prime minister Matteo Renzi is set to be defeated in his efforts to streamline the country’s government decisions and boost the country’s economy. Debate over the key vote has sparked concerns about political and economic instability there.

“European stocks should remain volatile and with lower volume throughout the week,” said Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna. “Many investors are on the sidelines waiting for the Italian referendum.”

Still, Italy’s FTSE MIB Index climbed the most among western-European benchmarks, rising 2.1 per cent as it rebounded from a two-month low.

Mr Renzi’s office denied news reports that he may step down even if he wins the constitutional reform vote.

Meanwhile, Swiss drugmaker Actelion jumped 10 per cent, reversing earlier losses, on reports that Johnson and Johnson raised its takeover offer for the company.

Airlines IAG and Air France-KLM rose at least 1.3 per cent on the back of a drop in oil prices.

NEW YORK

Wall Street was ignoring a slide in oil prices in early afternoon trading, with the Nasdaq hitting a record high, boosted by healthcare stocks and strong economic data.

Figures published on Tuesday showed the US economy grew faster than initially thought in the third quarter, notching its best performance in two years.

Gross domestic product increased at a 3.2 per cent annual.

At 12.35pm local time, the Dow Jones Industrial Average was up 0.14 per cent, while the Nasdaq Composite was up 0.5 percent at 5,395.66 points, having earlier hit a record of 5403.86.

Among individual stocks, UnitedHealth surged by nearly 4 per cent to a record high after the largest US health insurer’s upbeat forecast. Other insurers also gained.

Tiffany was up 4.2 per cent after the jeweller reported its first rise in sales in eight quarters.