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European shares rebound from seven-week lows as techs, Italian banks recover
June 13, 2017 / 7:54 AM / 5 months ago

European shares rebound from seven-week lows as techs, Italian banks recover

LONDON (Reuters) - A recovery in tech stocks and fresh optimism over troubled Italians banks lifted European shares from seven-week lows on Tuesday. Capita (CPI.L) led the gains after offering a reassuring outlook.

People walk through the lobby of the London Stock Exchange in London, Britain August 25, 2015. REUTERS/Suzanne Plunkett/File photo

The pan-European STOXX 600 index ended up 0.6 percent, almost fully recovering losses from the previous session. Italy's benchmark .FTMIB rose 0.9 percent.

Tech stocks .SX8P rose more than 1 percent after Monday’s sell-off, when concern over valuations at U.S. companies spilled over to Europe, particularly companies supplying Apple.

“The tech sector has been relied upon as the driver of the bull run, particularly in the U.S., so whenever there is any weakness that’s observed there, it is quickly picked up by the market,” said Jonathan Roy, advisory investment manager at Charles Hanover Investments.

“The sector is fairly well-valued, in some respects quite richly valued, so that could be a weakness if we do see a souring in sentiment.”

Dialog Semiconductor (DLGS.DE), Infineon (IFXGn.DE) and ASM International (ASMI.AS) were among the tech stocks gaining the most, rising 1.2 to 4.7 percent.

Italian banks .FTIT8300 were another bright spot, gaining 1.1 percent amid renewed hopes for a rescue of struggling Veneto banks. Italy’s economy minister said a solution was “close”

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UBI Banca (UBI.MI) and BPER Banca (EMII.MI) led European banks .SX7P, rising 3.4 percent and 2.5 percent respectively. UniCredit (CRDI.MI) gained 1.6 percent. Receding election worries also helped.

“It’s quite evident that the authorities are not too keen to let any institutions really, really fail ... there’s always a last-minute deal done for them,” Charles Hanover Investments’ Roy said. He sees value in Italy and Spain over the next 18 to 24 months.

Among individual stocks, shares in troubled British outsourcing firm Capita (CPI.L) jumped 15 percent after the group said it hoped to improve its profitability and secure more contract wins in the second half of 2017, following a series of profit warnings.

Visitor attractions group Merlin Entertainments (MERL.L) fell around 2.6 percent, however, after giving a cautious outlook. Attacks in Manchester and London had hit domestic demand, it said.

Broker action propelled shares in London Stock Exchange Group (LSE.L) 5.4 percent higher after Credit Suisse and RBC raised their target prices on the stock.

Greek shares .ATG rose 1.6 percent after officials said a compromise on debt may be reached on Thursday, paving the way for new loans for Athens while leaving the contentious debt relief issue for later.

“Attention has now squarely turned to debt relief talks” Barclays analysts said in a note. “We believe that a marked effort would still be required to enable Greece to secure debt sustainability.”

Reporting by Kit Rees and Danilo Masoni; Editing by Larry King

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