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European shares head back to four year peak

Written by Business World, on 2nd Dec 2019. Posted in EU

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European shares climbed back to recent highs on Monday, as upbeat factory activity data from China and major eurozone economies boosted trade-sensitive sectors, including miners and oil and gas.

The pan-European STOXX 600 index rose 0.6%, closing in on a fresh four-year peak hit last week, led by a 1.5% gain for China-exposed miners, while rising oil prices helped the energy sector up 1.2%.

Optimism spilled over from Asian markets as a private business survey showed factory activity in China unexpectedly expanded at the quickest pace in almost three years in November, with solid increases in output and new orders.

Further helping the mood, IHS Markit's manufacturing PMI for France picked up at the fastest pace in five months in November, while Germany's manufacturing sector contracted at a slower pace for the second month in a row.

"It (China data) was slightly better than expected, so that's good news," said Teeuwe Mevissen, senior market economist at Rabobank.

"It also makes sense given the latest developments regarding the phase one U.S.-China trade agreement... the sentiment has improved slightly because it seems fairly plausible that they will reach this phase one agreement."

Despite a bumpy ride this year, the STOXX 600 index has managed to gain for the past four months and stayed below record highs amid expectations that Beijing and Washington will hammer out a "phase one" trade deal this year.

Germany's DAX was on track to post its best day in more than three weeks, led by a 1.8% gain for Lufthansa after a media report said Qatar Airways was considering taking a stake in the German carrier.

However, threatening Germany's ruling coalition government, the Social Democrats chose new leaders who are demanding a shift in policies, and several senior conservatives on Sunday ruled out talks to renegotiate a governing agreement.

Shares in Danish medical equipment maker Chemometec jumped 13.2% after the company appointed Steen Soendergaard as new chief executive following the abrupt departure of its former CEO.

Shares in British fashion retailer Ted Baker fell 2.7% the company said it may have overstated inventory by as much as 25 million pounds.

British online grocer and technology company Ocado dropped 8.5% to the bottom of STOXX 600 after launching a 500 million pounds bond issue, in part to fund its construction of robotic warehouses. (Reuters)

Source: www.businessworld.ie

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