Europe close: Stocks shake off weak survey data to finish higher
European shares held on to their strong gains on Monday despite survey data showing another contraction in eurozone business activity.
Helping to steady investor sentiment was a quick resolution to the UK leadership contest that saw former Chancellor Rishi Sunak come out on top.
Some analysts had also begun to speculate that US government bond yields might be set to top out, whilst some observers believed that the US central bank might be set to move a bit more slowly after a widely expected 75 basis point interest rate hike on 2 November.
The pan-regional Stoxx 600 index was up 1.4% to 401.84, alongside a 1.58% advance for the German Dax to 12,931.45 and a rise of 1.79% on the FTSE Mib to 21,982.95.
In parallel, the euro was a tad higher, while TTF gas futures and longer-term euro area government bond yields were lower.
In the background, Wall Street rallied on Friday after The Wall Street Journal said the Fed might debate on a smaller interest rate hike in December.
Eurozone business activity contracted again in October, at the fastest pace in two years, according to a preliminary survey released on Monday.
The S&P Global 'flash' composite output index, which covers both the services and manufacturing sectors, fell to 47.1 from 48.1 in September, coming in below the 50.0 level that separates contraction from expansion for the fourth month in a row. Economists had been expecting a reading of 47.5.
This marked the fastest rate of decline since November 2020. Excluding pandemic lockdown months, the latest reading was the lowest since April 2013.
The eurozone services purchasing managers’ index fell to 48.2 in October form 48.8 in September, hitting a 20-month low. Meanwhile, the flash manufacturing PMI printed at 46.6, down from 48.4 a month earlier and hitting a 29-month low.
In equity news, shares in Philips dipped after the Dutch medical equipment maker said it expected to axe 4,000 jobs as it tried to streamline its organisation.
Dutch technology investor Prosus fell 17% after Chinese President leader Xi Jinping's newly unveiled leadership team heightened fears that economic growth will be sacrificed for ideology-driven policies.
Shares in educational publisher Pearson gained 9% after an upbeat third-quarter trading statement.