Paris: European stocks rose in early trade on Tuesday, erasing all of the previous session’s losses, as buoyant commodity prices boosted heavyweight energy shares such as Total and BP.
Tech stocks got a boost from US firm Texas Instruments, which raised its targets for second-quarter earnings and revenue, signalling improving demand in the chip market.
STMicroelectronics gained 5.2%, Infineon rose 2.7%, Nokia climbed 4%, and Alcatel-Lucent added 2.3%. We expect other companies to also beat their initial guidance when they report their second-quarter revenues in July,” Credit Suisse analysts wrote in a note.
At 2:00pm, the FTSEurofirst 300 index of top European shares was up 0.6% at 870.60 points.
The benchmark index has surged 35% since falling to a record low in early March, a sharp rebound spurred by signs of economic recovery, but the rally has lost steam over the past three weeks.
“The Spring rally has produced a big gap in valuations between cyclicals and defensives. But the market is now heading into a consolidation phase, and we should see a rotation in favour of utilities, healthcare and the likes,” said Jacques Henry, analyst at Louis Capital Markets, in Paris.
So far this year, the DJ Stoxx basic resources index, home of Europe’s mining and steel stocks, has gained 51%, the banking index has risen 22%, and the energy index added 17%. On the downside, the utilities index has lost 9.4% and the healthcare index is down 6.6%.
Around Europe on Tuesday, UK’s FTSE 100 index was up 0.4%, Germany’s DAX index up 0.6%, and France’s CAC 40 up 0.7%.
Oil rose above $69 a barrel, ending two days of falls, as the US dollar retreated and ahead of weekly stocks data forecast to show a fall in US crude inventories.
Total added 1.1%, BP gained 1.7% and Repsol climbed 1.6%.
Mining and steel shares were also on the upside, rising along with metal prices. Rio Tinto added 0.9% and ArcelorMittal up 2.8%.
French electrical components firm Legrand gained 5% after UBS upgraded its rating on the stock to “buy” from “neutral”, while food group Danone, upgraded to “overweight” from “equal weight” by Morgan Stanley, rose 3.5%.
Banking shares were on the rise, led by Lloyds Banking Group Plc, up 4.1%. British media reported the lender would close all branches of its Cheltenham & Gloucester mortgage unit and cut some 1,500 jobs.
Spain’s Banco Santander was up 1.3%, France’s Societe Generale was up 1.9%, and Credit Suisse rose 0.6%.
On the downside, Air France-KLM tumbled 3.8% after Europe’s biggest airline unveiled an 8.1% drop in passenger traffic in May, and after RBS cut its rating on the stock to “hold” from “buy”.