Europe: Miners, UBS help stocks claw back some losses

[BENGALURU] European stocks stabilised on Tuesday after their worst sell-off this year in the previous session, helped by a handful of positive corporate earnings and production updates from miners.

The pan-European Stoxx 600 index rose 0.5 per cent, after worries about the fast-spreading Delta coronavirus variant and slowing economic growth had knocked 2.3 per cent off the index on Monday.

Miners, among sectors that bore the brunt of Monday's bruising selloff, rose 1.5 per cent after BHP Group and Anglo American provided upbeat production numbers.

Swiss bank UBS climbed 5.3 per cent on posting a 63 per cent jump in second-quarter net profit, helped by a booming wealth management business. Peers Credit Suisse and Julius Baer also rose.

"We expect European (economic) growth to peak this summer (but) continue to favour risk assets over a 12-month horizon,"analysts at BCA Research wrote in a note.

"The UK is a case in point - broad-based vaccinations are keeping hospitalisation rates there low despite the sharp jump in Covid-19 infections. Thus, the market impact of the Delta variant may ultimately prove fleeting in developed economies."

British airline easyJet gained 0.9 per cent after saying it plans to fly 60 per cent of its pre-pandemic capacity in the July-September period, while Carnival rose 3.3 per cent as it expects to have resumed cruises with 65 per cent of its total fleet capacity by the end of 2021.

Europe's travel & leisure index has fallen sharply from its April record highs, with travel-related stocks getting hit by soaring infections across the continent and last-minute changes to travel rules.

After hitting an all-time high just a week ago, fears that surging coronavirus cases will topple a nascent economic recovery has seen the Stoxx 600 slide more than 3 per cent from that level. A continued decline in bond yields showed worries remained.

Home appliances maker Electrolux tumbled 6.4 per cent after it reported a lower-than-expected second-quarter operating profit and warned global supply chain woes would worsen in coming months.

But "healthy incomes growth and elevated household saving rates in developed markets should mean that goods spending slows rather than slumps," said Jennifer McKeown, head of global economics service at Capital Economics.

Norwegian telecoms operator Telenor rose 3.8 per cent after it raised its full-year revenue outlook.

Analysts expect profit at Stoxx 600 companies to jump 115.2 per cent in the second quarter versus a year ago, according to Refinitiv IBES estimates, as Covid-19 restrictions eased across Europe.

Sweden's AB Volvo fell 2.5 per cent as it warned of further production disruptions and stoppages this year due to chip shortages.

REUTERS