Europe open: Stocks bounce back as miners, energy issues gain

European stocks rose in early trade, bouncing back from the Fed-fuelled losses of the previous session, taking their cue from positive Asian trading.

At 0910 BST, the benchmark Stoxx Europe 600 index was up 1.2%, Germany’s DAX was 1% firmer and France’s CAC 40 was up 1.4%.

At the same time, oil prices gained ground as the dollar eased back a little and amid political instability in Nigeria, where the country’s petroleum installations are being attacked.

West Texas Intermediate was up 0.8% to $48.53 as barrel and Brent crude was up 0.6% to $49.08.

The Stoxx 600 oil and gas index rose 1.5% while the sub-index for basic resources added 1.7%.

“Investors have calmed down somewhat after feverishly pricing in the prospect of a slew of Fed rate hikes for 2016. Yesterday we had a succession of regional Fed presidents who seemed anxious to trump one another with their hawkish outlooks. This culminated with Jeffrey Lacker saying he was comfortable with the idea of four hikes for the rest of this year. Then an FOMC voter in the shape of New York Fed President William Dudley said that the market’s pricing of the probability of future monetary tightening had been far too low prior to the release of the April minutes. That may have been so,” said David Morrison, senior market analyst at SpreadCo.

“However, markets are calmer this morning which seems sensible given that we are in the US Presidential election year, there’s an upcoming referendum on the UK leaving the EU and both the US and global economic outlooks could best be described as cloudy. It’s possible that we get one US rate increase this summer, but talk of three this year seems far-fetched.”

In corporate news, Unicredit rallied on press reports the Italian lender is reviewing a plan to sell assets to boost its capital base.

Babcock edged higher after announcing that its joint venture with Lockheed Martin, Ascent Flight Training, has been awarded a contract by the Ministry of Defence to deliver the rotary wing element of the UK Military Flying Training System.

Bookie Ladbrokes surged in London after the competition watchdog said it and Gala Coral may have to close up to 400 shops if the merger between the two is to go ahead. The number was lower than expected and investors were relieved the merger would be able to proceed.

On the downside, Cartier owner Richemont was under the cosh after it posted an increase in full-year profit but warned of a challenging outlook.