A jump in commodity producers is pushing European stocks toward their biggest two-day rally since August.
The Stoxx Europe 600 Index advanced 2.4 percent at 11:22 a.m. in London. Glencore Plc jumped 9.2 percent after soaring as much as 72 percent in Hong Kong trading as analysts said the concerns around the commodities company’s solvency are unjustified. The London shares have regained about 50 percent from last week’s record low. ArcelorMittal climbed 8 percent after its chief financial officer projected an increase in steel demand in Europe, while Citigroup Inc. recommended buying the stock.
“It’s playing a little bit of catchup as the outlook for the rest of the year improves,” saidPatrick Spencer, equities vice chairman at Robert W. Baird & Co. in London, referring to the benchmark index for European stocks. “Interest rate hikes for the moment are off the table. Plus you’ve got an accommodative ECB and the third quarter-earnings outlook looks reasonable.”
The Stoxx 600 ended 0.5 percent higher on Friday, erasing losses of as much as 0.9 percent, as a weak employment report in the U.S. fueled speculation that the Federal Reserve will delay its interest-rate increase. Traders are now betting it will happen nextMarch.
Optimism is returning to European equities after the Stoxx 600 lost 16 percent from its April record through the end of last week. It reached its lowest level since January on Sept. 29 as concern grew that a slowdown in China will hurt the global recovery, while plunges in Volkswagen AG and Glencore further sapped sentiment. An exchange-traded fund tracking European stocks had a record $462 million in outflows last week, and trading of bearish options jumped.
The WisdomTree had record outflows.
Telenor ASA climbed 2.7 percent after saying it will divest its stake in VimpelCom Ltd. to focus on markets such as the Nordic region. Lloyds Banking Group Plc rose as the U.K. government said it will sell at least 2 billion pounds ($3 billion) of the lender’s shares early next year.
K+S AG slumped 21 percent as Potash Corp. of Saskatchewan withdrew its 7.85 billion-euro ($8.8 billion) proposal to buy the German company. Volkswagen dropped 2.9 percent, extending its lowest price in four years.
Portugal’s PSI 20 Index added 2.4 percent after a weekend vote. The nation’s ruling coalition, which has implemented tax increases and spending cuts over the past four years, won the nation’s first general election since regaining its economic sovereignty
source: Bloomberg
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