Europe: Stocks recover from 2016 low as miners, tech advance

[LONDON] European equities rebounded from slumping to 2016 lows yesterday as all sectors advanced, led by tech and mining shares.

The Stoxx Europe 600 Index added 0.9 per cent, trimming the weekly drop to 3.6 per cent, which would still make it the worst week since March. SAP jumped 2.4 per cent, after Deutsche Bank recommended buying the stock after the sell-off, and Glencore added 2.2 per cent.

European stocks slumped to the lowest level since December 2016 on Thursday as rising interest rates led investors to rotate out of their equity holdings and as concerns about the US-China trade spat remained in focus. Although US economic growth remains robust, traders are wondering when the impact from the tax reform will start dissipating, which would weigh on corporate earnings and stocks.

"European equities are under-owned and look oversold," said Emmanuel Cau, head of European strategy at Barclays Bank Plc. "At the same time, Europe could be a relative beneficiary if the rotation into value were to continue as the US is biased towards growth. However, Europe is unlikely to outperform if US equities keep falling."

BLOOMBERG