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European stocks close near 2-week high as PMI data brings cheer

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06/23/2020 | 10:09am EDT
The German share price index DAX graph is pictured at the stock exchange in Frankfurt

By Sruthi Shankar

European shares closed at their highest in almost two weeks on Tuesday, powered by cyclical stocks, following signs that business activity in the continent was rebounding faster than expected from a coronavirus-driven slump.

The pan-European STOXX 600 index ended 1.3% higher, with economically sensitive sectors such as banks <.SX7P>, automakers, miners and insurers gaining between 1.9% and 3.3%.

Euro zone stocks rose 1.6% after IHS Markit's Purchasing Managers' Index (PMI) showed a historic coronavirus-induced downturn in the bloc had eased again in June as businesses reopened after weeks of lockdown.

The index recovered more than expected to 47.5 from May's 31.9, after touching a record low of 13.6 in April.

Germany's DAX jumped 2.1%, France's CAC 40 rose 1.4% and the UK's FTSE 100 rose 1.2% after better-than-expected readings from Europe's largest economies.

"It would no longer surprise me if the data is a surprise on the upside," said Daniel McDonagh, head of European portfolio management team at Pyrford International, part of BMO Global Asset Management.

"The big question still is whether we can proceed on the exit strategy from the lockdown in a smooth manner and really avoid a step backwards."

Investors also took relief as White House trade adviser Peter Navarro walked back from his earlier remarks that the Phase One trade deal with China was "over" and U.S. President Donald Trump confirmed in a tweet the trade deal was fully intact.

BlackRock's Investment Institute said it was "warming up" to European assets following what it called the eurozone's "impressive" efforts to tackle the coronavirus, and is considering an upgrade to European equities.

Trillions of dollars in stimulus from central banks and governments have helped the STOXX 600 recover nearly 37% from March lows, although the pace of recovery has slowed in June amid worries over a fresh rise in coronavirus cases.

Helping Germany's DAX outperform, Bayer AG gained 5.8% after reports that the company is set to reach a settlement this week with U.S. plaintiffs that claim its glyphosate-based weedkillers cause cancer.

German metals trader Kloeckner & Co jumped 17.5% after it provided positive earnings outlook for the second quarter.

Payments company Wirecard, mired in an accounting scandal, bounced 18.8% after shedding more than 140% in the past three sessions.

UK-listed drugmaker Hikma Pharmaceuticals fell 5.6% after a major shareholder sold most of its nearly 1 billion pound stake.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva and Alexandra Hudson)

Stocks mentioned in the article
ChangeLast1st jan.
BAYER AG -0.50% 64.2 Delayed Quote.-11.41%
CAC 40 -1.54% 4978.48 Real-time Quote.-15.42%
DAX -1.55% 12602.53 Delayed Quote.-3.39%
EURO STOXX 50 -1.62% 3295.66 Delayed Quote.-10.55%
HIKMA PHARMACEUTICALS PLC -0.90% 2101 Delayed Quote.6.48%
KLÖCKNER & CO SE -1.54% 5.11 Delayed Quote.-17.36%
SET -0.10% 1341.07 Real-time Quote.-15.03%
STOXX EUROPE 600 -1.30% 365.63 Delayed Quote.-10.90%
STOXX EUROPE 600 NR -1.29% 801.31 Delayed Quote.-9.54%
WIRECARD AG -2.79% 2.373 Delayed Quote.-97.73%
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