LONDON (Reuters) - European shares rose on Wednesday as oil and mining stocks rallied and investors shrugged off worries over trade tensions between the United States and China.
The pan-European STOXX 600 rose 0.5 percent, even though Asian stocks fell after President Donald Trump said the United States was taking a “tough stance” with China on trade.
Oil stocks .SXEP rose 1.6 percent after Brent prices reached $80 a barrel following a drop in U.S. crude inventories and as sanctions on Iran added to concerns over global supply. Mining shares .SXPP climbed 1.3 percent.
“We think it is likely that the equity market sell-off, particularly in the European time zone, will slow down or even temporarily reverse,” said RBC strategists.
“While ‘trade frictions’ and a perception of slowing Asian markets as a result are easy culprits, there seems to be a lot of risk priced in at this stage too,” they said.
Dutch biotech firm Galapagos (GLPG.AS) soared 17.6 percent to the top of the STOXX after positive trial results for a drug to treat rheumatoid arthritis.
Zara owner Inditex (ITX.MC) rose 4.1 percent after the fashion retailer said it expected profit margin growth in the second half.
Salvatore Ferragamo (SFER.MI) gained 4.1 percent, with traders citing rumours of a possible takeover. The family that controls the fashion group is not interested in selling its stake, a spokeswoman for the group said.
Hermes (HRMS.PA) shares rose 4 percent after the French handbag maker reported record first-half margins. “Hermes delivered a solid set of results... Importantly, the company noted a positive contribution to profits from strong demand in China,” Berenberg analysts wrote.
British energy provider SSE (SSE.L) sank 8.3 percent after it warned first-half profit would halve compared with last year, calling its financial performance “disappointing and regrettable”..
The FDA’s leader announced a number of steps the agency planned to take as part of a broader crackdown on the sale and marketing of e-cigarettes to children.
Traders said the action was not as harsh as expected.
Elsewhere broker research moved some stocks. German utility E.ON (EONGn.DE) fell 3.5 percent after Morgan Stanley analysts cut their target price on the stock.
Swiss chocolate maker Barry Callebaut (BARN.S) gained 6.9 percent as UBS upgraded the stock to “neutral” from “sell”.
“We undertook some supply chain checks and think Barry could sign new contracts soon, benefiting its volume growth in the next 12-18 months,” analysts at the Swiss bank wrote.
Overall, however, analysts are lowering earnings outlooks for MSCI Europe companies, as the second-quarter earnings season ends and investor attention turns to political risk.
Reporting by Helen Reid and Danilo Masoni, editing by Larry King and David Stamp