Europe close: Auto shares pace gains
European equities managed a higher close on Thursday despite weakness in the banking sector and a slide lower in Brent after prices breached the $50 a barrel mark - for the first time since November - earlier in the day.
The benchmark DJ Stoxx Europe 600 index finished the day just 0.1% or 0.35 points higher at 348.91, while Germany’s DAX tacked on 0.66% to trade at 10,272.71 and France’s CAC 40 rose 0.69% to 4,512.64.
Automobiles&parts stocks paced gains on the DJ Stoxx 600, with a gauge for shares in the sector advancing by 1.49% or 7.21 points to 490.23. The sector index for banks on the other hand ended down by 0.52% or 0.81 points at 154.89.
“Given that we have two major risk events for the markets in the coming weeks –EU referendum in the UK and possible rate hike from the Fed - I do wonder though whether this rally has the legs to build significantly on the moves of the last couple of days,” said Craig Erlam, senior market analyst at Oanda.
Oil prices staged an early advance after data from the Energy Information Administration on Wednesday showed US crude supplies declined by 4.2m barrels for the week ended 20 May, compared with expectations of a 2.5m drop.
However, by the end of trading West Texas Intermediate crude oil futures had slipped 0.10% to $49.51 a barrel.
FXTM’s chief market strategist, Hussein Sayed, said: “Whether the bullish trend still has legs or if an imminent correction is due remains a wild guess, as speculators over-exaggerate on the upside as they did recently on the downside. However, OPEC’s meeting on June 2 remains the key risk factor in the short term as markets are eager to know whether an agreement on a potential oil freeze will see the light.”
In corporate news, shares in Banco Popular tumbled after the Spanish lender announced plans to raise up to €2.5bn through a share issue to strengthen its balance sheet. The news sent its stocks to its lowest level since 1992 on heft trading volumes. Peers Banco de Sabadell and Caixabank were also firmly in the red.
United Utilities edged lower after posting a drop in full-year profit, while Daily Mail and General Trust shares slumped after the company reported a decline in first-half profit and warned that a weak print advertising market will squeeze margins in the media business.
On the upside, London-listed food ingredients maker Tate & Lyle rose after reporting a surge in full-year profit.
Spanish economic growth was confirmed at a 0.8% quarter-on-quarter clip for the first three months of the year, but the breakdown of the data revealed that business investment registered the slowest pace of growth in two years. Analysts put that down to the uncertainty surrounding the upcoming Spanish elections.