Europe midday: Shares extend gains on positive euro zone sentiment
European shares extended gains at midday on Wednesday, rebounding from losses in the previous session as business and consumer optimism in the euro zone rose unexpectedly in September.
The pan European Stoxx 600 benchmark index was up 0.77% in early deals with all major regional bourses higher.
Confidence in the eurozone unexpectedly improved in September after a drop in August, the European Commission said, boosted by optimism among consumers and in the industry and construction sectors and came despite a further rise in inflation expectations among manufacturers and consumers.
The Commission’s economic sentiment indicator rose to 117.8 from 117.6 in August, after hitting an all-time peak of 119.0 in July. Economists had expected sentiment to fall back further.
Sentiment in industry improved to 14.1 from 13.8 in August, although it fell in the services sector to 15.1 from 16.8. In construction, the indicator rose to 7.5 from 5.5 helping offset a decline in retail to 1.3 from 4.6.
In commodities, oil prices fell for a second day as the rally in crude fell away. Brent crude was down 1.7% at $77.75 a barrel and US light crude traded 1.8% lower at $73.9 a barrel with crude inventories in the US rising unexpectedly.
Prices on Tuesday pushed beyond $80 as economies recover from the coronavirus crisis and demand increased.
Stocks in the US fell overnight as the benchmark 10-year Treasury yield touched a high of 1.567%, a move that prompted tech stocks to lead the broader markets lower with Facebook, Microsoft and Alphabet losing more than 3%.
Rising bond yields hurt growth stocks, including tech stocks, because they lower the relative value of future earnings.
“Once again it is fears about surging energy prices, supply chain disruptions, and concerns about more persistent inflation that is sparking a move out of the more highly valued areas of the stock market, as the volatility that we saw last week, continues into this week as bulls and bears indulge in a game of pass the parcel,” said CMC Markets chief market analyst UK Michael Hewson.
In the UK, queues formed again at petrol stations as panic-buying continued despite refineries reporting no shortage of fuel. The government finally mobilised 150 army truck drivers to help with the crisis.
In equity news, German food industry system supplier company GEA Group gained with a 4.3% rise, while British clothing retailer Next rose 4% as both reported positive results.
Anglo-Swiss drugmaker AstraZeneca was up after it said its newly acquired Alexion division will purchase the remaining equity in peer Caelum Biosciences in a deal that could be worth up to $500m.
Royal Mail plunged 6.72% to the bottom of the Stoxx after UBS downgraded the stock to 'sell' from 'buy'.