European stocks rose in early trade Tuesday, tracking gains on Wall Street overnight, with London’s FTSE a top performer as U.K. equities played catch-up to Monday’s rally.
After a long holiday weekend, the FTSE 100 index closed up 139 points or 2.7% at 5,267, while the FTSE 250 index took on 246 points or 2.5% to settle at 10,243.
Elsewhere, Asian stocks rallied for a second day, as investors came in to buy risk assets after the recent decline, and along with Europe helped trigger a robust start on Wall Street.
In commodities, crude oil and most base metals were higher at last check. In Europe, a fall in the economic-sentiment indicator led stocks to pull back.
On the continent, European markets pared gains in late morning trade on Tuesday, after the EC’s eurozone economic sentiment indicators fell further than expected, to 98.3 in August from 103.0 in July.
In the U.K., a Bank of England report revealed that despite the number of mortgage approvals in July hitting their highest in 14 months, net consumer credit only increased by a whisker last month, increasing at approximately half the pace predicted by economists.
This latest sign of lacklustre progress in the British economy had limited impact on the market, however. Instead, the U.K. equities continued to rally as investors sought out bargains, even in the face of weak data from the U.S. in afternoon deals, whereby consumer confidence was shown to have crumbled to its lowest point since April 2009. The Conference Board's consumer confidence index fell to 44.5 in August from a downwardly revised 59.2 in July as the protracted debt-ceiling debate, a volatile market, and a persistently high unemployment rate weighed on consumer sentiment. The August figure was far worse than the 52.0 reading expected by economists.
Among the top performers in London, meanwhile, were FTSE 100 banks, which benefitted from an upbeat note from analysts at Deutsche Bank. Royal Bank of Scotland (RBS), which was upgraded by Deutsche Bank to Buy, jumped 8.0%, and Barclays (BARC), named as the analysts’ top sector pick, too on 6.7%. Lloyds Banking Group (LLOY) was also in fine fettle, rising 7.8%.
Elsewhere, oil heavyweight BP (BP.) climbed 2.9%, in part fuelled by a stronger oil price, and in part on the back of news it has completed its $7.2 billion deal to explore for, dfistribute and market natural gas in India with Reliance Industries. Separately, Russian oil giant OAO Rosneft and U.S. giant Exxon Mobil (XOM) announced today they have entered into a $3.2 billion deal to jointly explore the Black Sea and the arctic Kara Sea. The agreement, which will allow Exxon to use Russia's Arctic shelf and give Rosneft access to Texas and the Gulf of Mexico, essentially closed the door on BP achieving any such deal with Rosneft.
