London: European shares rose on Tuesday, extending a rally into a sixth session, after Alcoa got the second-quarter US earnings season off to a strong start, and BP extended a recent rally.
At 2:59pm, the FTSEurofirst 300 index of top European shares was up 1.7% at 1,043.10 points, after rising more than 6% in the previous five sessions.
The index is still down more than 6% from its April peak, on worries about debt levels in Europe and slowing economic growth. Alcoa, the largest U.S. aluminium producer, lifted its outlook for global consumption of the metal and posted strong quarterly results, fuelling optimism that others will follow suit in this reporting season.
The company’s shares rose in after-hours trade, with Wall Street finishing marginally higher on Monday, in light volumes.
Norwegian aluminium producer Norsk Hydro rose 3.5% on Tuesday.
“Alcoa was better than expected but markets are waiting for the real flow of information as earnings season hasn’t really got going yet,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
“The cyclical bull market is intact, though that’s become questionable based on what 200-day moving averages are doing.”
JP Morgan and Google are among other US companies reporting later this week.
BP shares, which have fallen 38% from an April peak, rose 3.7%, extending a recent gain that saw the shares close at their highest in more than a month on Monday.
The company hopes to finally stop the flow of oil spewing from the floor of the Gulf of Mexico, after the worst offshore oil spill in US history.
Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC40 rose between 1.2 and 1.4%.
Portugal’s PSI20 was flat, paring earlier losses, after Moody’s Investor Service cut the country’s debt by two notches to A1.
Some analysts played down the significance of the downgrade. “They’re stating the obvious,” said Michael Hewson, analyst at CMC Markets. “The market is fully aware of what the situation is in Portugal and Greece.”
“What it does do is to re-focus the market’s attention on the banks’ stress tests coming up.” Banks were mostly higher, with Barclays, BBVA and Deutsche Bank up between 1.4 and 3.1%.
Chinese stocks fell 1.6% on reports that Beijing will not relax tougher property measures any time soon. China is looking to rein in real estate speculation.
The mining sector recovered from an earlier fall to join the broad rally in stocks, even with lower prices for copper and other metals, as the dollar strengthened.
Antofagasta, Fresnillo and Vedanta rose between 1.4 and 2%.
Among other individual companies, luxury cosmetics group L’Oreal rose 1% after posting higher revenue in the second quarter, helped by emerging markets and a weaker euro, confirming a recovery in consumer spending that started earlier this year.
In a move closely watched by financial markets, Greece’s Public Debt Management Agency (PDMA) sold euro 1.625 billion ($2.03 billion) of six-month T-bills, its first debt sale since a giant European Union/International Monetary Fund emergency loan backstop was agreed in May.
German analyst and investor sentiment fell in July by more than expected to its lowest since April 2009, a closely watched survey showed.
The Mannheim-based ZEW economic think tank’s monthly poll of economic sentiment fell to 21.2 from 28.7 in June, compared with a consensus forecast of 25 in a Reuters poll. A separate gauge of conditions rose to 14.6 from -7.9 in June. A reading of -1.5 had been forecast.