Europe open: Shares led higher by mining and oil sector; German data shrugged off

European equity markets edged higher in early trade, underpinned by strength in the basic resources and oil and gas sectors, as investors shrugged off another disappointing German data release.

At 0900 BST, the benchmark Stoxx Europe 600 index and France’s CAC 40 were up 0.7% while Germany’s DAX was 0.8% higher.

The Stoxx 600 basic resources index was up 4% as metals prices advanced, while the corresponding index for oil & gas index rose 2.3% as oil prices pushed up. West Texas Intermediate was 1.6% higher at $49.32 a barrel while Brent crude was up 1% at $52.44 a barrel.

Mike van Dulken, head of research at Accendo Markets, attributed the rise in oil prices to a weaker US dollar and comments on Tuesday from both the OPEC secretary general and the chief executive of Royal Dutch Shell about operational and investment reductions leading to price rises and spikes.

In addition, he pointed to US API data showing stockpile drawdowns implying less US production and recent rig count data suggesting the US is continuing to pull back on oil production/output in reaction to lower prices.

Miners also got a lift from a bullish note by Morgan Stanley, which upgraded its stance on Anglo American, BHP Billiton and Rio Tinto.

SABMiller rallied after Anheuser-Busch InBev said it has submitted a third takeover offer to the company at £42.15 per share. AB InBev said the revised proposal is designed to be a compelling cash offer for SABMiller’s public shareholders and Altria Group and BevCo, who together hold approximately a 41% stake.

Volkswagen shares pushed higher after chief executive Matthias Mueller said in an interview with a German newspaper that the company would launch a recall for cars affected by its diesel emissions crisis in January and complete the fix by the end of next year.

On the downside, supermarket retailer Tesco slipped into the red after it posted a 55% drop in first-half operating profit as discount retailers continue to take their toll, and warned that the grocery market remained challenging.

Brewer Diageo nudged lower after saying it has sold its interests in Desnoes & Geddes and Guinness Anchor Berhad to Heineken NV and bought additional shares in Guinness Ghana Breweries.

Shares in retailer Marks & Spencer fell after JPMorgan Cazenove downgraded the stock to ‘neutral’ from ‘overweight’.

Figures released earlier by the Economy Ministry showed German industrial production unexpectedly fell in August, at its fastest pace in a year. Output dropped 1.2% from a revised 1.2% jump in July and against expectations for a small increase.

On Tuesday, German industrial orders also disappointed, showing a 1.8% month-on-month decline in August, compared with expectations for a 0.5% increase.