Europe: Shares jump 1% as report revives US-China trade optimism

[BENGALURU] European shares bounced back from a four-day slump on Wednesday, lifted by a report that Beijing and Washington are moving closer to a trade deal.

The STOXX 600 closed 1.2 per cent up after Bloomberg reported that the two sides were closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal.

The report lifted the benchmark from a one-month low hit on Tuesday after US President Donald Trump said a deal might have to wait until after the US presidential election next November.

"I don't think people are positioned one way or the other," said Chi Chan, European equities portfolio manager at Hermes Investment Management. "The reason is, every time you get a bit of news the market swings quite violently ... that shows there is nothing particularly baked in."

"It's the marginal buyer that is moving the market."

Financials and industrials led the charge, with planemaker Airbus rising 3.2 per cent after winning an order from US carrier United Airlines.

Further support came from IHS Markit's better than expected final reading on November business activity in the euro zone.

Trade-sensitive German shares were up 1.2 per cent, logging their biggest percentage gain in a month. Chipmakers such as Infineon Technologies and STMicroelectronics gained more than 1.4 per cent after upbeat earnings forecast from US peer Microchip Technology.

Dutch semiconductor company ASML Holding advanced by 2.6 per cent after J.P. Morgan raised its price target on expectations of strong performance in 2020.

French shares gained 1.3 per cent after Trump and French counterpart Emmanuel Macron said on Tuesday that they hoped to smooth out their differences over a digital services tax. Washington has threatened 100 per cent tariffs on French champagne, handbags and other products if France proceeds with the proposed tax on big technology companies.

Luxury stocks such as LVMH, Kering and Hermes firmed by between 0.6 per cent and 1.5 per cent, enjoying some respite after a rough day on Tuesday because of Trump's tariff threat.

A big faller was French telecoms company Orange, which slid 4.7 per cent after traders pointed to disappointment over the firm's dividend outlook.

London shares lagged, rising only 0.4 per cent, partly because of a rally in the pound, which tends to hit heavyweights with international exposure.

REUTERS