Thursday, 13 August 2015 19:45
LONDON: European shares bounced on Thursday after a 4 percent fall this week, tracking a late rally on Wall Street and gains in Asia on efforts by China’s central bank to slow the sharp descent of the yuan that has rocked markets worldwide.
The pan-European FTSEurofirst 300 index was up 1.9 percent at 1,545.14, with national benchmark euro zone indexes broadly in line with that rise at 1112 GMT.
Automakers and luxury goods stocks, among the worst hit this week, were among the biggest gainers after China’s central bank said that the was no reason for the market to fall further.
“I think markets massively misunderstood what happened in China,” Jefferies strategist Sean Darby said.
“The exchange rate in China is moving to a free float. There was too much hype over the word ‘devaluation’ and markets are realising that after 48 hours,” he said.
European equities hit their lowest level in a month after China allowed its currency to fall. But there were signs the pace of decline was slowing after the central bank set a midpoint for the currency that was not as low as expected.
Better-than-expected profits from shipping and oil group Moller Maersk and a positive earnings outlook from travel firm TUI sent shares in the two companies up around 7 percent.
Nestle reported worse-than-expected half-year sales, hurt by a recall of its Maggi noodles in India, though the Swiss food group’s shares rose 3.7 percent after it said it maintained its 2015 outlook.
Among standout losers, shares in Germany’s No. 2 utility RWE dropped 5.9 percent after it posted weaker-than-expected profits in the first half, hit by a mix of low wholesale power prices, a small footprint in renewables and problems at its UK business.
“Conventional power generation was below our estimates, and the UK supply operations (Npower) were a major disappointment,” John Musk, analyst at RBC Capital Markets, said in a note.
Dutch insurer Aegon slumped 5.5 percent after it missed earnings forecasts.
The financial sector was also in the spotlight after Frankfurt prosecutors said they have charged seven employees and one former employee of a major Frankfurt-based bank following an investigation into suspected tax fraud in the trading of carbon permits.
Prosecutors did not name the bank but sources familiar with the matter identified it as Deutsche Bank.
The bank’s shares were up 2.1 percent. While fears over Greece’s ability to avert financial ruin appear to have receded, the European Union moved to keep Greece on a tight rein after its latest bailout.
Sources said the 85 billion euro deal will be reviewed by lenders in October and any discussion of debt relief will only come at a later stage.
