February 4, 2020 / 9:51 AM / 19 days ago

UPDATE 1-European shares rebound as China markets stabilise; resources rally

* Resources index up 2.6%, eyes best day in 3 months

* Oil and gas stocks also recover

* Markets may be seeing some "relative" bargain buying - analyst (Adds comment, details, updates prices)

By Ambar Warrick

Feb 4 (Reuters) - European shares rose on Tuesday, tracking a slight recovery in Chinese equities, while resource and mining stocks rallied after heavyweight miner Glencore maintained its 2020 production outlook.

The pan-European STOXX 600 index rose 1% by 0900 GMT, having ticked up slightly on Monday after logging its worst week in six months.

China stock markets led a recovery in Asian shares, although with over 400 dead and several travel bans on China, headlines about the coronavirus outbreak are expected to sway markets in the near term.

"We did see some stability in Chinese markets ... European markets kept their heads yesterday, as China was doing some catching up, and the fact that they've stabilized today is helping," said Connor Campbell, analyst at British financial spread better Spreadex.

The basic resources sector, which consists of several China-focused miners, was the best performer among the European regional subindexes, eyeing its best day in three months.

Glencore Plc rose 4.7% after the miner maintained its 2020 production targets.

The resources sector was sold heavily over the past week and touched a three-month low on Monday, with worries over slowing Chinese demand also hurting commodity prices.

"Given that stocks were at record highs before news of the virus, and with investors likely to keep pushing markets higher, we may also be seeing some relative bargain buying, given the recent drop in valuations," Campbell added.

Oil and gas stocks, which have also been sold off heavily over the past week, surged 1.5%.

London-listed BP Plc was among the top boosts to the sector, adding nearly 4% after it raised its dividend and reported a better-than-expected fourth-quarter profit.

Danish medical equipment manufacturer Ambu jumped to the top of the STOXX 600 after reporting better-than-expected quarterly revenue.

German stocks rose about 1% after data on Monday pointed to some recovery in the beleaguered manufacturing sector. However, an economic slowdown in China is likely to add more pressure. (Reporting by Ambar Warrick in Bengaluru; Editing by Subhranshu Sahu and Shounak Dasgupta)

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