Europe midday: Stocks push higher in quiet trade as autos race ahead
European stocks rose, with autos and basic resources lending support on what is likely to remain a fairly quiet session as US markets will be closed for the Thanksgiving holiday.
At midday, the benchmark Stoxx Europe 600 index was up 0.8%, Germany’s DAX was 1.4% higher and France’s CAC 40 was up 1%.
The Stoxx 600 autos and parts index - to which the DAX is heavily exposed - was 2.8% firmer.
“We are seeing a massive short-squeeze at the moment, the DAX has broken several important resistance levels and closed an important gap, all of this is generating buy signals and forcing shorts to cover their position,” said Markus Huber, senior analyst at Peregrine & Black.
“Below average trading volume today due to Thanksgiving in the US is exacerbating the move and finally many consider car makers who are leading the charge in the DAX today, like BMW and Daimler still as cheap and undervalued, consequently anybody who wants to make sure they are involved in any potential year-end rally in December prefer these stocks as they offer not only good value but also limited risk for now.”
Meanwhile, the sub-index for basic resources rallied 1.2% as base metals recovered.
Sentiment was also being underpinned by reports on Wednesday that Eurozone central bank officials were considering options such as staggering charges on banks hoarding cash or buying more debt ahead of the next European Central Bank meeting.
On the corporate front, German semiconductor manufacturer Infineon Technologies rocketed after it said net profit in the quarter ended September rose 80%.
Daily Mail & General Trust bounced back from heavy falls in the previous session on the back of gloomy guidance. The stock was helped along by a rating upgrade from Societe Generale and news that it will net £29m from the sale of its online discount business, Wowcher.
Severn Trent was also on the front foot after the water utility posted a 2.6% rise in first half profit.
Supermarket chain Tesco was higher after saying it has paid $12m to settle one of two class action lawsuits brought by disgruntled US investors who sued over the overstatement of the grocer's 2014 first-half profits.
On the downside, Remy Cointreau slumped after the French spirits company reported a 7% drop in first half like-for-like operating profit.
BHP Billiton was under pressure after it rejected claims from the United Nations that waste from the tailings burst at the Samarco mine in Brazil was toxic.