Europe close: Bank, basic resource issues buoy benchmarks

European stocks ended the session in the black, buoyed by a solid performance from basic resources and bank issues, with investors seemingly tracking the prices of metals and oil ahead of Friday's US jobs report.

The benchmark DJ Stoxx Europe 600 index finished 0.66% higher at 340.97, Germany’s DAX climbed 0.61% to end the day at 9,776.62 and France’s CAC 40 edged up by 0.41% to 4,424.89.

A gauge of basic resource stocks closed with gains of 3.64% to 263.11, alongside gains of 1.7% to $4,782.50 per metric tonne for LME traded three-month copper futures.

“Whilst overall sentiment has turned positive, not everybody is convinced fully yet that this move isn't a bull-trap. Besides relatively low trading volumes much of the move of the past couple of days is based on the assumption that major central banks will successfully stabilise global growth and that the US economy won't be going into a recession,” said Markus Huber, senior analyst at Peregrine & Black.

“Because of the move being mostly based on assumptions and speculations so far and less so on hard facts it wouldn't take much to derail the current rally.”

West Texas Intermediate crude oil futures rose 0.23% to $34.48 a barrel and Brent crude was up by 0.22% to $36.89 despite US Department of Energy data showing a large in commercial crude oil stockpiles in the States.

The Stoxx 600 bank sector sub-index notched up gains of 3.36% to 154.64.

ECB policymakers talk up need for growth

Speaking in Frankfurt, European Central Bank governing council member Benoit Coeure said: “[The Eurozone] urgently needs higher growth to bring down high unemployment, to deleverage the economy and to raise inflation back to our price stability objective," he added.

Coeure also took aim at critics of negative interest rates in the euro area, arguing that it was lenders and governments who had work to do to make the financial system whole again.

Nevertheless, the ECB would be careful to avoid the risk of undue negative impacts on the so-called bank lending channel, he added.

In parallel, in testimony delivered to the French parliament’s Finance Commission, Francois Villeroy de Galhau, another governing council member, said the outlook for the euro area economy had “undoubtedly increased”, Market News International reported.

Elekta, Luxottica sharply lower

In corporate news, Old Mutual rallied following well-received 2015 results for its South African banking subsidiary Nedbank.

Broadcaster ITV was weaker. Although the company posted a rise in profit and revenue for 2015 and announced a special dividend, analysts noted concerns about the outlook for advertising revenue.

Swedish medical technology company Elekta tumbled after its third quarter earnings missed analysts’ expectations, while Luxottica Group fell after the eyewear maker downgraded its outlook.

Intertek shares edged higher even as the inspection, product testing and certification group said it swung to a loss in 2015.

The US ADP employment report revealed that the US private sector generated 214,000 jobs last month, ahead of the 190,000 expected by economists.

However, the reading for the previous month was revised lower to a print of 193,000, down from a preliminary estimate of 205,000.

On average, economists polled ahead of Friday's official US employment report forecast the American economy created 190,000 new non-farm positions.