EUROPE MARKETS: Bayer And Oil Shares Lead Gains For European Stock Benchmarks

08/20/2018 | 12:25pm


By Barbara Kollmeyer, MarketWatch



Greek equities end with slight gains as country emerges from bailout



European stocks closed higher on Monday, joining a global equity rally as investors grew optimistic ahead of a week that includes a major U.S.-China trade meeting and a gathering of global central bankers.



Where are the major benchmarks trading?



The Stoxx Europe 600 rose 0.6% to 383.23. The move represents something of a modest rebound from recent losses, coming after a bruising 1.2% decline last week, its third straight weekly fall. Recent losses have been pegged to concerns over Turkey's currency crisis and sluggish commodity prices.



Opinion: If turmoil spreads in Europe, expect heavy flows into U.S. stocks



Germany's DAX 30 closed up 1% to 12,331.30, its biggest one-day percentage gain since July 26. The index is coming off its third straight down week, its longest such stretch since February.



Greece's ATHEX Composite Share Price Index rose 0.3% to 712.61.



France's CAC 40 gained 0.7% to 5,379.65 and the U.K.'s FTSE 100 rose 0.4% to 7,591.26.



Italy's FTSE MIB Index closed up 0.3% to 20,470.97.



The euro rose slightly against the dollar, changing hands at $1.1, compared with $1.1438 late Friday in New York.



What's driving the market?



An eight-year-long Greece bailout drama officially came to an end on Monday, with European Commission Vice President Valdis Dombrovskis congratulating Greece for emerging from out of the EU's stability program. However, he also said the country needs "build on this achievement by sticking to sound fiscal and economic policies."



(https://twitter.com/VDombrovskis/status/1031435409711157248)





But while Greece may have been viewed as a positive, albeit long expected, the region could remain volatile amid worries about Italy's economic and political situation. The single-currency bloc will face a big test this autumn when the new Italian government must present a budget. Italian banks fell in early trading, but they subsequent recovered off their lows of the day. Banco BPM ended down less than 0.1% and Unione de Banche Italiane SpA (UBI.MI) rose 0.7%.



Trade optimism lifted global equities, with U.S. stocks trading near multimonth highs . A report in The Wall Street Journal on Friday said negotiators on both sides are mapping out talks aimed at resolving major differences by November.





Investors remained watchful of a continuing currency crisis in Turkey, with the battered lira weakening some again on Monday after Turkey's sovereign credit was downgraded by both S&P Global Ratings and Moody's Investors Service on Friday.



The Trump administration has rejected an effort by Turkey to link the release of a U.S. pastor with relief for a major Turkish bank facing billions of dollars in U.S. fines, according to a report in The Wall Street Journal .



What are strategists saying?



"Markets often find it difficult to focus on one topic, and thus with the focus now shifting away from Turkey and towards China, it comes as no surprise that the pessimism of last week is fading into obscurity," said Joshua Mahony, market analyst at IG, referring to a meeting this week between the U.S. and China over trade.



But he warned of getting too hopeful over the meeting, given all the previous ones have "shown precious few signs of anything that looks like a breakthrough."



What stocks are in focus?



Driving gains for the DAX and the Stoxx 600 overall were shares of Bayer up 3%. The German multinational pharmaceutical company tumbled 16% last week after a litigation loss by Bayer-owned Monsanto in California over whether its herbicide Round-up is carcinogenic.



Oil names were moving higher as Brent crude prices stabilized. Shares of Total SA rose 1%, as did BHP Biliton PLC (BLT.LN).



BP climbed 0.4%. Royal Dutch Shell added 0.7%.



Italian infrastructure group Atlantia tumbled 4.7% in Milan, as the government has reportedly began a formal move (https://www.bloomberg.com/news/articles/2018-08-20/atlantia-sinks-as-italy-proceeds-with-revoking-toll-road-license) to yank its toll-highway operation concessions after a highway bridge collapsed in Genoa last week, killing at least 38. The bridge was run by Autostrade per l'Italia, a unit of Atlantia.



G4S fell 1.2% after the U.K. government took over the operations of HMP Birmingham , a major prison run by the company, after an inspection found it was in a "state of crisis."





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