Forexpros –
Forexpros – European stocks closed higher Tuesday, amid strong gains in auto stocks and hopes for new stimulus measures in China while concerns over Spain’s ailing banking sector continued to weigh.
During European afternoon trade, the EURO STOXX 50 edged up 0.58%, France’s CAC 40 soared 1.37%, while Germany’s DAX 30 marched higher by 1.16%%.
Speculation for new monetary easing by China to support growth in the world’s second largest economy helped support market sentiment.
Building the bullish case, Hopes for China central bank easing has been growing after Beijing pledged to speed up approvals for new infrastructure-related projects last week.
Meanwhile, investors remained cautious after the yield on Spain’s 10-year bond rose to 6.47% on Monday, the highest level this year after the government announced that it was to recapitalize one of the country’s largest commercial lenders, Bankia.
The announcement fuelled fears that the rising cost of bank rescues could force Madrid into seeking an international bailout.
Spanish lenders extended earlier losses as shares in Banco Santander plummeted 3.34% and BBVA plunged 3%. Bankia saw shares tumble 9.74%, after plummeting over 28% on Monday as trading resumed. Trading of the stock had been temporarily suspended on Friday.
Other European lenders also turned broadly lower, as Germany’s Deutsche Bank and Commerzbank declined 0.63% and 0.07% respectively, while France’s biggest lenders BNP Paribas and Societe Generale retreated 0.86% and 1.30%.
Meanwhile, auto makers led gains with shares in Volkswagen up 3.09% and BMW surging 2.31%, while Renault and Peugeot advanced 1.82% and 1.79%.
In London, commodity-heavy FTSE 100 climbed 0.65%, supported by strong gains in energy stocks and after data showed that U.K. realized sales rose unexpectedly in May.
Essar Energy was one of the session’s top gainers, with shares soaring 4.08%, closely followed by Tullow Oil, up 2.51%.
Meanwhile, copper producers Xstrata and Kazakhmys extended earlier gains, climbing 2.11% and 1.67% respectively, on the back of rising copper prices.
Mining giants Rio Tinto also remained sharply higher, advancing 1.62%, as did Anglo American and Bhp Billiton, with shares jumping 1.49% and 1.27%.
Elsewhere, U.K. baker Greggs Plc rallied 6.76% after U.K. Chancellor of the Exchequer George Osborne reversed a plan to make hot takeaway snacks subject to value-added tax. The decision was considered to be one of the most controversial measures in his March 21 budget.
In bearish news, U.K. lenders tracked their European counterparts lower, as shares in the Royal Bank of Scotland plummeted 2.53% and Lloyds Banking declined 1.54%, while Barclays and HSBC Holdings retreated 0.99% and 0.15%.
In the U.S., equity markets are following higher with the Dow Jones Industrial Average up 0.70%, the S&P 500 is posting a 0.48% gain, while the Nasdaq is higher by 0.47%.
Investors are expecting a speech from ECB president, Mario Draghi and U.S. pending home sales on Wednesday.
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