Europe close: Stocks rally to end dismal quarter on upbeat note

European equity markets gained ground on Wednesday, as investors digested a raft of mixed economic data that might see the European Central Bank extend its stimulus programme.

The benchmark Stoxx Europe 600 index closed up 2.46%, while France’s CAC 40 gained 2.53% and Germany’s DAX rose 2.22%.

The euro was on the back foot against the main currencies, losing 0.77% against the dollar and falling 0.50% and 0.89% respectively against the euro and the pound, while Brent crude rose 0.31% to $48.37 a barrel.

“The euro is caught between uncertainties at the two central banks,” said CMC Markets’ analyst Jasper Lawler.

“Hawkish Fed speakers and the negative Eurozone CPI print that may prompt further easing from the European Central Bank may have swung it in the favour of the bears.”

Mixed Eurozone data

Data released earlier showed German retail sales suffered an unexpected monthly decline in August, although a sharp yearly increase – albeit below expectations – indicated private consumption remains a key driver for the economy.

Meanwhile, the German unemployment rate was unchanged at 6.4% in September and the Eurozone unemployment rate was steady at 11%.

Elsewhere, figures released by Eurostat showed inflation in the euro area unexpectedly turned negative in September.

The annual consumer price index fell 0.1% compared with a 0.1% increase in August.

“Nothing buoys markets like the idea of more quantitative easing and this morning’s data release from the Eurozone certainly ticked the boxes to set up the second largest rally in September,” said IG’s market analyst Joshua Mahony.

“Rising unemployment and a deflationary CPI number in the Eurozone provide a perfect backdrop for Mario Draghi to further broach the idea of an extension and/or intensification of the current QE programme.”

Across the Atlantic, private consultancy ADP said the US private sector generated 200,000 jobs in September, compared with August’s downwardly revised tally of 186,000 and expectations for a 188,000 reading.

Glencore rebounds

In company news, Glencore rallied 14.1% after saying it has taken proactive steps to position the company to withstand current commodity market conditions.

"Our business remains operationally and financially robust - we have positive cash flow, good liquidity and absolutely no solvency issues,” it said.

The stock tumbled 29% on Monday to its lowest level since the IPO in 2011, after analysts at Investec said Glencore had no equity value at current spot prices.

Elsewhere, shares in French electrical goods retailer Darty rocketed 19.1% after books and music retailer Fnac said it has made a proposal to buy the company for £533m.