PARIS: European shares closed at a two-week high on Tuesday, led by miners on strength in metal prices and the Netherlands’ largest insurer NN Group on strong capital generation, while UK shares outperformed their regional peers after a long weekend.
The pan-European STOXX 600 closed 1% higher in broad-based gains, logging its best two-day performance in over a month.
Having partly recouped recent losses, the STOXX 600 managed to avoid its worst monthly showing for this year and is now eyeing its steepest one-month fall since May on elevated bond yields and a worsening economic outlook for the euro zone and top export market China.
European miners climbed 2.1%, touching a three-week high intraday.
Top metals and crude oil consumer China’s recent policy support, including halving stamp duty on stock trades, continued to buoy investor sentiment.
Europe’s largest bank HSBC and insurer Prudential , with business in China, gained 1.3% and 4% respectively. This, coupled with a 4.2% rise in Barclays , aided a 0.6% advance in the healthcare index.
The luxury sector, with strong exposure to Chinese consumer demand, gained 1.3% to close at a two-week high.
“The China development is good, but it is not anything incredibly new,” said Giles Coghlan, chief market analyst at HYCM.
“China is trying to shore up support with promises of stimulus, but it’s not been enough to reassure investors who are still hanging out for a bigger policy shift.” Also aiding sentiment were hopes of a pause in US interest rate hikes following a drop in monthly job openings, which led a Wall Street rally and pushed euro zone bond yields lower.
Real estate stocks jumped 1.4%.
Meanwhile, traders raised their bets on a 25-basis-point European Central Bank rate hike in September, a slight shift from expectations of a pause following a sharper-than-expected contraction in euro zone business activity.
A survey showed German consumer sentiment is expected to fall in September, largely due to persistently high inflation rates.
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