Europe open: Stocks rise as oil prices lend support

European stocks rose in early trade, bouncing back from losses last week as oil prices provided a boost and investors looked ahead to central bank meetings.

At 0910 BST, the Stoxx 600 index was up 1%, Germany’s DAX was up 0.8% and France’s CAC 40 was 1.2% higher.

At the same time, oil prices advanced amid reports Venezuela said OPEC and non-OPEC countries were nearing a deal to stabilise output . West Texas Intermediate was up 1.4% to $43.65 a barrel while Brent crude was 1.1% higher at $46.27. This helped the Stoxx 600 oil and gas index to gain 1.6%.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: “The Federal Reserve and the Bank of Japan’s monetary policy verdicts due on Wednesday, are the major talking points across the globe.

“The market assesses 20% probability for the Fed to raise the interest rates this week. This means that a clear majority is still not ready to absorb higher US rates, yet the accompanying statement will be important as it is expected to hint at the Fed’s intentions regarding the future of its monetary policy. The main question is whether or not the Fed could hike rates at least once before the end of this year. The expectations for a September rate hike hint at a status quo on Wednesday, yet the odds for a December rate hike bounced to 55% from below 50% preceding the inflation data.

“In Japan, the efficiency of the current monetary policy has become a major concern. The BoJ is trapped into a questionable effectiveness of its negative rate policy (NIRP), the tightening limits surrounding its asset purchases program as well as its declining credibility.”

Corporate news was thin on the ground.

Sky was a high riser as Morgan Stanley upgraded the stock to ‘overweight’ from ‘equalweight’, while Weir Group rose sharply after JPMorgan Cazenove lifted it to ‘overweight’ from ‘underweight’.

On the downside, Deutsche Bank shares were still in the red on last week’s news that the US Department of Justice has asked the German lender to pay £14bn to settle allegation s of mis-selling mortgage securities.

Outsourcer Mitie Group tumbled after it warned that full year profits would be materially lower than expected due to a drop-off in higher margin contracts in the first-half and the cost of new efficiency programmes.