Europe: Stocks advance as technology, resource companies rally

[FRANKFURT] European stocks advanced as technology and resource companies rebounded, while investors speculated on the possibility of Chinese stimulus.

BHP Billiton Ltd and Rio Tinto Group rose at least 1.5 per cent, leading commodity producers to the best performance of the 19 industry groups on the Stoxx 600. ASML Holding NV added 2.7 per cent, pushing technology stocks to the second-largest gain. Statoil ASA and Royal Dutch Shell Plc weighed on oil-and- gas shares even as oil rose from the lowest level in almost five months.

The Stoxx Europe 600 Index climbed 0.7 per cent to 399.82 at the close of trading, reversing earlier losses of as much as 0.7 per cent. China's stocks surged the most in a month amid speculation that the government will act to prop up growth following a wider-than-expected drop in exports. Shares also benefited from expectations that mergers of state-owned enterprises may be accelerated to bolster economic growth.

"The markets are watching China quite closely as the latest data were rather disappointing, and are now speculating on a Chinese stimulus package," said Christian Zogg, a fund manager who helps oversee about US$10 billion at LLB Asset Management in Vaduz, Liechtenstein.

"Lower interest rates should boost GDP growth and EPS growth." Among European stocks moving on corporate news, Banco Popolare SC increased 3.6 per cent after late Friday posting better-than-expected second-quarter earnings.

Greece's ASE Index rose for a third day, advancing 2.1 per cent for the best performance among western-European markets. Banks led gains as policy makers expressed optimism that talks on a third bailout deal can be wrapped up by tomorrow. Piraeus Bank SA jumped 14 per cent and Eurobank Ergasias SA gained 13 per cent.

BLOOMBERG