The pan-European Stoxx 600 index closed 0.4 per cent higher, recovering some losses following its biggest one-day declined since August in the last session
European shares closed higher on Monday as a soft business activity reading strengthened the case for more monetary policy easing by the ECB this year, with rate-sensitive sectors such as real estate and utilities gaining.
The pan-European Stoxx 600 index closed 0.4 per cent higher, recovering some losses following its biggest one-day decline since August in the last session.
Autos led gains among major Stoxx sectors with a 1.9 per cent advance while retail also added 1.2 per cent.
A survey showed euro zone business activity declined sharply and unexpectedly this month, as the bloc’s dominant services industry flatlined while a downturn in manufacturing accelerated.
A payback from the Paris Olympics was largely expected. But today’s release was much worse than many had expected, suggesting a rather gloomy underlying growth picture for the eurozone, according to Fabio Balboni, senior economist, eurozone at HSBC.
The downturn seemed broad-based with Germany, Europe’s biggest economy, seeing its decline deepen while France returned to contraction following August’s Olympics boost.
Germany’s DAX ended 0.7 per cent higher while France’s benchmark ended near flat, bogged down by declining bank stocks.
French banks including Credit Agricole, SocGen and BNP Paribas were among top decliners on the Stoxx index with the euro zone banks index slipping 1.8 per cent.
The euro slid against the dollar while the yield on the German two-year bond, which reflects near-term rate expectations, dropped to 2.149 per cent.
Rate-sensitive real estate gained 1.3 per cent while utilities, often traded as a bond proxy, added 1.1 per cent.
The European Central Bank cut interest rates in June and also earlier this month.
Rate decisions in Switzerland and Sweden later this week will also be on investors’ radar.
