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Europe: Recovery rally for stocks as cyclicals make a comeback
[LONDON] European shares enjoyed a recovery on Thursday, snapping their longest losing streak since October 2016 as the cyclicals sectors which had driven a market-wide sell-off made a comeback.
The pan-European STOXX 600 index climbed 0.4 per cent, with the cyclicals-heavy DAX up 0.5 per cent while Britain's FTSE 100 and Italy's top stock index lagged, trading flat.
Financial services, basic resources and technology sectors were among the best-performing, driving the market higher while recovering oil prices also helped support energy stocks.
Investors continued to digest a raft of earnings updates, with all the top movers reacting to results.
French telecoms firm Bouygues led gains, up 3.8 per cent after raising its profitability goal for the year, buoyed by a robust 37 per cent jump in nine-month operating profits.
London-listed private equity firm 3i Group also rose, by 4.2 per cent, after results, while shares in postal group Royal Mail climbed after letter revenues fell less than expected.
Facilities and catering firm Sodexo however fell 4.9 per cent as traders expressed disappointment over its margin guidance and annual revenues coming in slightly below consensus forecasts.
The company on Wednesday said it was buying US company Centerplate for US$675 million, putting more pressure on its results to impress and justify the expenditure.
Troubled British engineer GKN sank 5.2 per cent, the top faller after it announced a further write-off and ditching CEO designate Kevin Cummings.
Overall the MSCI EMU index of euro zone companies is tracking earnings growth of 10.7 per cent in dollar terms for the third quarter, with basic materials, financials and technology the main drivers of earnings beats. The broader MSCI Europe index is delivering 10 per cent earnings growth.