Europe midday: China, eurozone PMIs help shares recover
European shares moved into positive territory on Monday, as investors took heart from China and eurozone economic data and shrugged off worries about proposed new lockdown measures in the UK and the looming US elections.
The pan-European Stoxx 600 index was up 1.3%, with the UK’s FTSE 100 recovering from earlier falls to be 1.18% higher. Germany's DAX had pushed ahead by 1.87% and France's CAC 40 by 1.78%.
The British government has proposed a four week lockdown from Thursday, subject to parliamentary approval in a vote on Wednesday. Italy, Spain, Ireland, France, Belgium, Greece and Germany have already imposed measures.
"A better than expected China manufacturing PMI number for October of 53.6, its best level in nearly 10 years, points to the fact that the world’s second biggest economy has continued to gain traction as it slowly returns to some kind of normal after its February lockdown," said CMC Markets analyst Michael Hewson.
“The positive session has seen markets in Europe recover from an early negative start, to push into positive territory, helped by better than expected manufacturing PMIs which are helping to offset concerns over the prospect of, at best, a flatlining economy as we head into year-end.”
Manufacturing growth in the eurozone soared in October but the recovery from was largely driven by Germany, a survey showed.
IHS Markit’s final Manufacturing Purchasing Managers’ Index climbed to 54.8 in October from September’s 53.7, its highest reading since July 2018 and ahead of the 54.4 flash estimate. Anything above 50 indicates growth.
UK stocks featured heavily in the main movers list, reflecting the fortunes of those sectors likely to benefit or suffer from the new lockdown.
Ocado shares were more than 10% higher as the online supermarket increased its guidance for annual earnings to more than £60m from more than £40m as consumers switch to online shopping – a trend that looked likely to continue towards Christmas.
The company also agreed to buy Kindred Systems, a piece-picking robotics company, for about $262m and robotic arm designer Haddington Dynamics for $25m.
Just Eat Takeaway was a high riser amid expectations that people will be ordering in food more once the second lockdown takes effect this week.
Travel and leisure-related stocks were in the red, with British Airways parent IAG, Premier Inn owner Whitbread, engine maker Rolls-Royce, transport operator National Express and budget airline easyJet.
Ryanair shares rebounded despite the Irish budget carrier reporting a €226m loss in the third quarter.
Retailers were also weaker, with JD Sports and Next both down.
Primark owner Associated British Foods reversed earlier losses after saying it expects to lose £375m in sales as new Covid-19 lockdowns across Europe forced the closure of its stores.
Ladbrokes owner GVC lost ground after it warned that core earnings could fall by up to £43m as new coronavirus restrictions were imposed on its European shops.
Shares of outsourcer Serco tumbled after it lost a Ministry of Defence contract to provide nuclear warheads but reiterated its full-year guidance.