Europe open: Resource stocks pace the advance, but HSBC slumps

European stocks rose in early trade following a positive session in Asia, as oil prices advanced.

At 0905 GMT, the benchmark Stoxx Europe 600 was up 1.4%, Germany’s DAX was 1.7% higher and France’s CAC 40 was up 1.4%.

Basic resources were the standout gainers, with the Stoxx 600 index for the sector up 3.6% as commodity prices gained.

“A rebound in oil prices and a rally in Asia, after a change in China's chief market regulator, has seen European markets rise in early trade as investors attempt to capitalise on the continued positive momentum and move back towards risk that has seen markets rally strongly over the past nine days,” said Rebecca O’Keeffe at Interactive Investor.

“However, although the general trend of markets is higher, the sharp moves in both directions seen last week do suggest continued uncertainty and volatility is likely to continue.”

Oil prices were back in the black, underpinned by a drop in the US rig count. Figures from the Baker Hughes rig count released on Friday showed the number fell by 26 to 413 last week, marking the lowest level since December 2009.

West Texas Intermediate was up 2.8% at $30.46 a barrel and Brent crude was 2.3% firmer at $33.77.

In corporate news, HSBC Holdings was under the cosh after the bank said pre-tax profit rose just 1% in 2015.

Associated British Foods was on the front foot, however, after the Primark owner nudged up its full year earnings forecast.

Housebuilder Bovis Homes nudged higher after reporting a jump in full year pre-tax profit and revenue as legal completions and prices rose and the housebuilder sounded an upbeat note on 2016.

Home Retail shares surged following media reports over the weekend that Sainsbury’s could seek an extension to the Takeover Panel’s 18 March deadline, after South African retailer Steinhoff made an offer to the Argos owner.

On the data front, Markit's flash Eurozone PMI composite output index for February came in at 52.7 compared with 53.6 the previous month.

This was below consensus expectations for a reading of 53.3 and marked a 13-month low.

France saw a return to contraction as business activity fell – albeit marginally – for the first time since January of last year, declining in both manufacturing and services. New orders also fell and employment once again barely rose.

In contrast, Germany saw output growth hold up relatively well, albeit with the pace of expansion hitting a seven-month low as a solid rise in service sector activity was countered by the weakest rise in manufacturing output since November 2014.

Still to come on the macroeconomic calendar, Markit manufacturing PMI is due out in the US at 1445 GMT.