Home Stock European stocks rally for third day, led by auto sector

European stocks rally for third day, led by auto sector

imageStock Markets48 minutes ago (Sep 23, 2021 04:46AM ET)

(C) Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 22, 2021. REUTERS/Staff

By Sruthi Shankar

(Reuters) -European stocks rallied for a third day as global sentiment improved on easing concerns about cash-strapped developer China Evergrande, while car parts makers surged after earnings update from Faurecia.

The pan-European STOXX 600 index rose 1.3%, looking to end the week with solid gains after a sharp selloff on Monday. Technology and auto stocks were the top gainers, rising more than 1.5% each.

Asian stocks rose after Evergrande surged 30% in Hong Kong markets as its chairman sought to reassure investors after the company’s unit said it had “resolved” a coupon payment on an onshore bond.

However, the property developer’s Frankfurt-listed shares tumbled 19.5%.

“It was a bit of a September panic,” said Will James, fund manager of Premier Miton European Equity Income. “It’s a big issue but it’s not necessarily one which will spillover beyond Evergrande and the Chinese property sector.”

“We are at a point where we’ve had an aggressive COVID recovery, we’re past peak growth and there’s a question mark over the end of QE (quantitative easing). The problem with liquidity pulled out of the market brings with it the potential for more volatility.”

A survey showed euro zone business activity grew at its weakest pace in five months in September as curbs to limit the Delta variant of coronavirus hit demand and supply-chain constraints pushed input costs to a more than two-decade high.

UK’s blue-chip FTSE 100 lagged regional indexes with a 0.5% rise ahead of the Bank of England’s policy decision.

The central bank is expected to keep the interest rate steady as it approaches the end-point of its 895 billion pound ($1.22 trillion) asset purchase programme.

The U.S. Federal Reserve said on Wednesday it will likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected.

Boosting the auto sector, French car parts company Faurecia jumped 6.4% as a strong cash flow guidance outweighed lowered 2021 financial targets due to a sharp reduction in worldwide automotive production.

Rivals Valeo (PA:VLOF) gained 5.4% and Continental added 4.4% after a recent bout of weakness in the sector.

French vaccine maker Valneva climbed about 10% after it said it was expanding trials of a COVID-19 vaccine candidate and remains in talks with the European Commission over a potential contract.

European stocks rally for third day, led by auto sector

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