Europe close: Italian bank stocks rally

European stocks reversed opening losses to trade higher, with Italy’s FTSE Mib pacing the advance as the country’s bank stocks rallied.

The benchmark DJ Stoxx Europe 600 index edged higher by 0.30% to 332.87, Germany’s DAX was up by 0.63% to 9,682.99, France’s CAC 40 was up 0.22% to 4,312,63. Italy’s FTSE Mib was the standout gainer, however, up 1.25%.

Italian banking stocks advanced as investors waited to hear the outcome of a meeting between Italy’s central bank and Treasury officials aimed at potentially setting up a fund to deal with bad loans at banks.

In terms of sectors, basic resources were doing well as investors bet that benign Chinese inflation data would prompt some action by Beijing. The DJ Stoxx 600 sub-index for the sector rallied 3.09%, while a gauge of bank shares up by 1.29% to 139.33.

Data out earlier in China showed the consumer price index rose 2.3% on the year in March, versus expectations for a 2.5% increase and in line with the previous month’s 2.3%.

The consumer price index fell 0.4% in March from February.

“For an extended period, data from Beijing has repeatedly followed a negative path and this could be the continuing theme as the nation continues to transition away from its manufacturing roots towards the service sector,” said Lukman Otunuga, research analyst at FXTM.

“Despite the mounting concerns over China’s pace of growth, the Shanghai Composite Index received a welcome boost trading +1.65% higher as expectations heightened over further monetary easing by the People’s Bank of China (PBoC) in an effort to attain stability.”

At the same time, oil prices continued to move higher - despite a brief intra-day dip - on hopes of an agreement to cap production at the OPEC meeting on 17 April.

West Texas Intermediate was up by 1.63% to $40.38 a barrel and Brent crude futures gained 1.94% to end the day at $42.77.

In corporate news, shares in German software company SAP eked out a small gain even after cautioning that first-quarter results would be weaker than expected.

Daily Mail & General Trust was in focus after the Daily Mail parent confirmed it was in talks with private equity firms about a possible bid for Yahoo’s assets. Stock in the media outfit slipped 0.65% to 691p.

Clothing retailer Next was under pressure after Exane BNP Paribas cut its price target on the stock and said around 25% of the group’s profitability was at risk.

In the US, the earnings season was set to unofficially kick off later on Monday when aluminium producer Alcoa reports its first-quarter results after the closing bell.