Europe near 3-week high as auto, travel shares surge

European stocks hit a near three-week high on Tuesday as automakers gained on a surge in China sales numbers, with hopes of a steady economic recovery from the coronavirus crisis boosting global sentiment.

The pan-European STOXX 600 index rose 1.6pc, led again by a rally in sectors more exposed to economic swings like travel and leisure, miners and energy firms.

Automakers surged 3.1pc after data showed China's auto sales climbed 16.4pc in July, the fourth straight month of gains as the world's biggest vehicle market comes off lows hit during coronavirus lockdown.

Improving economic data in Europe, hopes of more stimulus and a vaccine for the COVID-19 have put the STOXX 600 on course for strong gains in August despite souring US-China relations and uncertainty over the 2020, US presidential election.

"There has been a decent tick-up in economic growth momentum, and earnings for some of the cyclical sectors have come in better than expected," said Paul Danis, chief global strategist at wealth manager Brewin Dolphin.

"There is a good reason to believe that some of the beaten-down value names could pick up. But it does make sense to have bias for the mega-cap growth names."

Positive earnings also added to the mood, with German online fashion retailer Zalando SE rising 3.4pc after reporting a more than doubling of sales on its site.

Meal-kit delivery firm HelloFresh, whose shares have more than doubled in value this year, rose 2.8pc after it raised its full-year guidance.

Investors globally took heart from signs that the latest US-China sparring appears not to have spilled over into their trade deal and continued to expect additional US fiscal stimulus.

UK's FTSE 100 climbed 1.8pc even as data showed the number of people in work in Britain fell by 220,000 in the three months to June, the most since 2009.

Holiday Inn-owner InterContinental Hotels gained 3.5pc as it saw some "very early" signs of a recovery in demand, but its profit slumped 82pc in the first half of 2020.

Domino's Pizza Group slipped 1.9pc as a fall in overall orders and the additional costs of cooking and delivering its pizzas safely hurt its first-half operating earnings.