PARIS: European shares gained on Tuesday with miners logging their best day in over eight months after China pledged more support for its slowing economy and as Unilever advanced after posting upbeat quarterly sales.
The pan-European STOXX 600 index rose 0.5%, marking its sixth straight session in the green.
Miners jumped 4.24% to lead gains in Europe as metal prices climbed on hopes of improving demand after top consumer China pledged to step up policy support for the economy.
“(China’s) initial stimulus measures were considered to be very small, so any acceleration of Chinese stimulus will be well regarded as a potential catalyst for global growth,” said Steve Sosnick, chief strategist at Interactive Brokers.
Unilever jumped 4.5% as the consumer giant beat underlying sales growth forecasts after again raising prices to offset higher costs.
However, a cautious mood prevailed in global markets as investors awaited monetary policy decisions from the Federal Reserve and the European Central Bank later this week, with both the banks expected to deliver 25 basis points rate hike each.
While traders are mostly betting it will be the Fed’s last hike in this cycle, they are less certain about the outlook for euro zone interest rates.
“We’ve gotten some economic reports recently that are really giving investors some nervousness about the ECB’s future path,” said Sosnick.
A day after poor business activity readings on the euro zone worsened concerns about a deepening recession in the bloc, a survey showed German business morale clouded over in July for the third month in a row.
Still, European stocks are trading at five-week highs as hopes of the Fed pausing its rate hikes offset concerns about the earnings season as well as a slowing euro zone economy.
Analysts expected second-quarter profit at STOXX 600 companies to have contracted by 8.1%, as per Refintiv IBES estimates, worse than the 4.1% decline forecast at the start of second quarter.
Adidas gained 3.7% as the sportswear giant forecast smaller operating loss this year, while Logitech jumped 12.3% after raising its outlook.
French software provider Dassault Systemes slid 5.0% after analysts said full-year targets were “difficult” to achieve following second quarter results.
Shares in MTU Aero Engines slumped 7.3% and Airbus shed 2.3% after RTX Corp said GTF engines that power Airbus A320neo aircraft need inspection.
European airlines including Air France KLM and Lufthansa dropped between 1% and 3%, dragging the travel sub-index down 0.7 percent.
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