Europe: Stocks rebound from weekly drop as miners lead gains

[LONDON] European stocks rose, following a selloff that wiped out two days of gains.

The Stoxx Europe 600 Index advanced 0.5 per cent to 354.81 at the close of trading, after earlier rising as much as 1.2 per cent. Shares extended a weekly loss on Friday as mixed US jobs data stoked concern about an impending Federal Reserve rate increase and the strength of the global economy.

"Nothing has fundamentally changed in Europe so this is really all about sentiment," said Daniel Murray, London-based head of research at EFG Asset Management. "Markets go down one day and up the next - volatility is something investors have to get used to now. Worries about growth in China are going to be less important as the focus moves towards the Fed for the next 10 days. You can make strong arguments either way about whether or not they will hike."

The volume of Stoxx 600 shares changing hands today was 38 per cent lower than the daily average, with US markets closed for a holiday. A measure of European-stock volatility posted moves exceeding 10 per cent in three of the past four sessions before rising 1 per cent.

In China, the governor of the country's central bank forecast a return to stability for markets. The world's second- largest economy is seeking to bolster confidence after concerns over growth spurred the biggest monthly drop in global equities since 2012 in August.

Data showing German industrial production increased in July also added to investor optimism.

Miners posted the biggest gain of the 19 industry groups on the Stoxx 600. Glencore Plc jumped 7 per cent after saying it will sell assets and shares to cut its $30 billion net debt. Antofagasta Plc advanced 7.5 per cent as metals prices climbed.

Abengoa SA surged 16 per cent, with a majority of the gains in the final half an hour of trading.

Enel SpA added 1.7 per cent after the Italian utility said it will meet its 2015 financial targets. Vallourec SA slid 4 per cent as Exane BNP Paribas cut its price target on the shares, citing a poorer outlook for 2016.

BLOOMBERG