ROME: European stock markets erased earlier losses and closed higher on Monday after a gauge of factory activity for the eurozone unexpectedly improved.
The Stoxx Europe 600 index SXXP, +0.34% rose 0.3% to end at 376.75, scoring its first rise in three sessions.
Stocks across Europe opened in negative territory on Monday after a private gauge of China’s manufacturing activity, the Caixin China manufacturing purchasing managers index, showed the sector contracted for an eighth straight month in October. The official reading on the country’s factory activity also indicated a contraction, sending stock markets lower across most of Asia.
Uncertainty over China’s growth outlook dented investment sentiment over the summer, triggering a market rout, particularly in emerging markets, and fueling concerns over the impact on global demand.
But the PMI reading for the eurozone was more uplifting, helping European stock markets turn higher in midmorning trade. The final reading on eurozone manufacturing PMI came in at 52.3 in October, up from the flash estimate of 52 and up from September’s 52 print.
“While the numbers weren’t great, they did provide more cause for optimism than was expected. It would appear that concerns over Chinese and emerging market demand may be overblown, which is particularly good news for Germany which has strong trade ties with the region,” said Craig Erlam, senior market analyst at Oanda, in a note.
The Stoxx Europe 600 has started out November with a step higher after a strong October, when it rose 8% for its best monthly performance since July 2009.
Germany’s own manufacturing PMI was raised to 52.1 from the 51.6 preliminary reading. The DAX 30 index DAX, +0.93% rose 0.9% to close at 10,950.67, for one of the largest country-specific advances in Europe on Monday.
France’s PMI was slightly worse than the estimates, coming in at 50.6 versus the flash reading of 50.7. The CAC 40 index PX1, +0.38% gained 0.4% to end at 4,916.21.
The manufacturing PMI for the U.K. jumped to a 16-month high of 55.5 in October, helping London stocks finish fractionally higher. The U.K.’s FTSE 100 index UKX, +0.01% closed in positive territory, but was basically flat at 6,361.80. Gains were limited by a drop by some of the benchmark’s miners after the sluggish China data.
Meanwhile, U.S. stocks moved higher in recent trading, helped by a flurry of deals.
Banks in focus: Banks posted some of the biggest moves in Europe on Monday after a series of earnings results. Shares of Commerzbank AG CBK, +6.86% ended 6.6% higher after the German lender said its turnaround plan is on track. Separately, Chief Executive Martin Blessing announced on Sunday he will step down next year.
