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London - European stocks recovered some lost ground after their worst weekly slides in three months pulled them further away from their US counterparts.
The Stoxx Europe 600 Index rebounded from a six-week low on Monday, boosted by gains in energy producers and miners as oil climbed. That’s a welcome recovery after the gauge’s slide last week made it diverge by the most relative to US shares since early December.
The Stoxx 600, down 6.7% this year, is lagging far behind the S&P 500 Index and MSCI Asia Pacific Index, which are both up.
Gains of more than 2% at Total and BP, as well as a 3.2% advance in BHP Billiton and 2.5% rise in HSBC Holdings are helping the Stoxx 600. The gauge added 1% at 10:30 in London. If maintained through the close, that would be the biggest gain since September 2.
"People are looking for pockets of value in a very technically-driven market, and that means European equities have a lot of catching up to do," said Alan Higgins, chief investment officer at Coutts & Company in London. His firm oversees £14.6bn. "It’s difficult to find a narrative right now.
Fears about the Fed increase and then dissipate, and all you can do is try to follow that news flow. The Fed is very aware of what the market is looking for and hopefully we’ll get no policy shock this week."
European stocks posted their first back-to-back weekly losses since June, failing to maintain a rally that had briefly erased the losses triggered by the UK secession vote.
Banks have showed renewed signs of weakness, while record outflows from European equity funds deepened to 32 consecutive weeks, adding up to about $87.5bn being pulled out this year.
Now all eyes are turning to this week’s Federal Reserve meeting, with economists and investors expecting the central bank to keep its policy unchanged. December is the first meeting with at least even odds of an interest-rate increase.
On Monday, the UK’s FTSE 100 Index climbed 1.5%, posting one of the best performances among western-European markets, thanks to the gains in miners. Weir Group added 3.6% after JPMorgan Chase & Company recommended buying shares of the maker of fracking pumps for oil companies, citing improving prospects.
France’s CAC 40 Index added 1.4%, boosted by a 2.6% rise in Renault after the car maker sank to a two-month low on Friday. Catering company Sodexo SA gained 2.3% after an upgrade by Raymond James Financial.
Benchmark gauges of Portugal, Italy and Spain climbed more than 1.1%, while Germany’s DAX Index advanced 0.8% for one of the smallest gains in the region. Deutsche Bank, which sank the most since the aftermath of the Brexit vote on Friday, lost another 1.4%.
Deutsche Wohnen fell 1.5% after Bank of America Corporation lowered its rating on the residential landlord to the equivalent of a sell, mentioning weakening investor confidence in the industry.
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