European equities rise as traders shrug off Italian vote outcome

Paris - After a tepid week marked by thin trading in the run up to the Italian referendum, European equities shrugged off its outcome to rally the most since the US election.

The Stoxx Europe 600 Index jumped 1.4% at 9:08 in London, led by gains in car makers and miners.
Milan’s FTSE MIB Index rose 0.8%. While it fell as much as 2.1% at the open following Prime Minister Matteo Renzi’s resignation, losses proved short lived.

"A 'no' vote was already priced in, and the bottom line is this wasn’t a major risk event for market - it wasn’t a vote on EU membership," said Sylvain Loganadin, a market analyst at FXCM in Paris.

"Now that this is behind us, people are buying the dip, betting on a catch-up rally in Europe."

Traders are boosting Italian shares toward the end of what has been a painful year, amid political uncertainties and simmering banking crisis. The FTSE MIB is still down 20% this year.

Stoxx 600 auto-related shares jump the most in almost a month as the euro weakened against the dollar, with Fiat Chrysler Automobiles and Renault up at least 3%.

Stephane Ekolo, chief European strategist at Market Securities, sees a good opportunity in "cheap" Italian shares.
 
"With the uncertainty surrounding the resignation of Renzi, one might be tempted to sell the Italian market, but we think after behind down so much, this uncertainty represents a good opportunity to buy some shares on the dips," he said by phone.

The FTSE MIB fell as much as 2.1%, before bouncing off key support levels representing the index’s 50-day and 100-day moving averages The euro fell as much as 1.5% against the dollar, before trimming losses to 0.3%.