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* STOXX Europe 600 index up 1.5 pct
* Basic Resources biggest sectoral gainer
* Banks rise after Bank of America upgrade
* Burberry slumps after update
By Danilo Masoni and Atul Prakash
MILAN/LONDON, Oct 18 European shares bounced
back on Tuesday, with mining stocks and banks leading the way,
while Burberry slumped following its earnings update.
The pan-European STOXX 600 index rose 1.5 percent
to its highest level in nearly one week. However, the benchmark
index is still down over 6 percent so far this year.
The market was helped by a 2.8 percent rally in the STOXX
Europe 600 Basic Resources index, the top sector gainer,
as metals prices rose, boosted by strong credit data in top
metals consumer China and a weaker dollar.
The European oil and gas index also increased 1.1
percent on the currency moves and comments from some analysts
that markets might not be quite as over-supplied as thought.
"The market has been trading in a sideways range for a
couple of months now. However, depressed stocks and sectors have
seen some rebound, with commodities stocks falling in that
segment," said Gerhard Schwarz, head of equity strategy at
Baader Bank in Munich.
Glencore Polymetal, Royal Dutch Shell
, ENI rose between 1.1 to 3.4 percent.
Danish jeweller Pandora soared 7.3 percent, the
top gainer in the STOXX 600 index, with traders citing a bullish
survey from Swedish broker Carnegie.
On the downside, Burberry fell 7.2 percent, even
after the British luxury fashion label reported a
better-than-expected rise in second-quarter retail sales.
Traders said the stock was hit by some negative broker
notes. The group's total sales also fell 4 percent on an
underlying basis in the six months to end-Sept, hit by a fall in
wholesale and licensing revenues.
"FX benefits aside, Burberry struggles to drive meaningful
growth," Liberum analysts said in note, adding that its
valuation was at a premium.
Before Tuesday's fall, Burberry shares had jumped nearly 50
percent since June.
French testing, inspection and certification company Bureau
Veritas fell 2.7 percent after the company cut its
outlook for full year 2016 as the weakness in the oil and & gas
and shipping markets weighed on its revenue.
Europe 600 Bank index rose 2.4 percent, the second
biggest sectoral gainer, after Bank of America-Merrill Lynch
upgraded regional banks to "overweight" on the back of light
positioning, progress on restructuring in Italy and a turn in
bond yields globally..
(Editing by Richard Balmforth)