Europe open: Basic resource stocks pace the advance

European stocks rose in early trade, taking their cue from positive sessions in the US and Asia, with basic resources pacing the advance.

At 0900 GMT, the benchmark Stoxx Europe 600 index was up 0.7%, Germany’s DAX was 1% higher and France’s CAC 40 was 0.8% firmer. Basic resources were the standout gainers, with the Stoxx 600 index for the sector up 2.9%.

“European equities are trading higher this morning seeing some early follow-through buying after yesterday's strong start to the new month. Sharply higher markets in Asia and the US overnight are helping markets to sustain their positive momentum for now,” said Markus Huber, senior analyst at Peregrine & Black.

“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.”

Meanwhile, oil prices were in the red after data from the American Petroleum Institute showed US crude inventories rose 9.9m barrels last week, which was much higher than the 3.6m barrel increase forecast by analysts.

West Texas Intermediate was down 1.2% to $33.99 a barrel and Brent crude was 0.4% lower at $36.68.

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

On the downside, 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 slid as the inspection, product testing and certification group said it swung to a loss in 2015.

Still to come on the data front, investors will eye the release of the US ADP employment report at 1315 GMT.