European stocks rise as China reopen hopes to lift luxury and mining stocks
- The basic resources sector is looking at its best week in more than 3 months
- Euro zone slowdown worsened in October, winter recession likely -PMI
- Big U.S. Jobs Data Watched, Unemployment Expected to Rise
Nov 4 (Reuters) – European stocks rose on Friday as luxury stocks and China-sensitive miners jumped on hopes the world’s second-largest economy will ease COVID-19-related restrictions.
European markets are now on track to rise for a third consecutive week, with positive momentum established the previous month by vastly better than expected earnings reports that carried through into November.
Recent unsubstantiated social media posts that China may relax its COVID rules in March have boosted investor optimism as both sectors have heavy exposure to the country. A jump in copper prices also boosted miners.
“The zero-tolerance policy China has pursued so far has certainly held back growth, not just in China but elsewhere as well…but if China now changes its strategy, that’s a positive development,” he said. Stuart Cole, Managing Director. macro-economist at Equiti Capital in London.
Luxury giants including LVMH (LVMH.PA)Kering (PRTP.PA)Pernod Ricard (PERP.PA) and Hermes International (HRMS.PA) climbed between 2.5% and 3.5%. A report said Kering was in advanced talks to buy fashion brand Tom Ford.
Among other stocks, the manufacturer Andritz (ANDR.VI) jumped 9.2% to the top of the STOXX 600 as its quarterly sales and earnings rose significantly.
Societe Generale (SOGN.PA) jumped 5.9% after posting better-than-expected net profit, while Monte dei Paschi di Siena shares (BMPS.MI) plunged 18.4% after the bank completed a 2.5 billion euro ($2.4 billion) capital raise.
The STOXX 600 bounced off week-long lows triggered by hawkish comments from the US Federal Reserve and Bank of England, ahead of data that will likely show the smallest US job creations in nearly two years in October, with a slight increase in the unemployment rate.
Data so far indicate that the euro zone is headed for a winter recession, with the European Central Bank (ECB) showing no signs of moderating its aggressive policy tightening cycle in its fight against record inflation.
Eurozone business activity contracted last month at the fastest pace since late 2020 as high inflation and fears of a deepening energy crisis hit demand, a survey showed.
Reporting by Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu and Vinay Dwivedi
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