European Stocks Rise Despite Slow U.S. Home Sales
European stocks closed broadly positive Tuesday after wobbling slightly following a larger-than-expected fall in U.S. pending home sales.
Investors hope the negative impact of the recent credit crunch was fully priced into the market and the Federal Reserve would continue to cut interest rates.
The London FTSE-100 was flat, while the Paris CAC-40 and Frankfurt DAX were in the green. The FTSE CNBC Global 300 was also in positive territory.
U.S. stocks were lower as speculation that the worst global credit problems may be over was more than offset by a drop in energy shares as oil prices fell.
Pending U.S. sales of previously owned homes fell by a larger-than-expected 6.5% in August as more borrowers seeking home loans were turned away by cautious lenders, the National Association of Realtors said Tuesday.
The Dow Jones Industrial Average reached a new record high Monday, in spite of a massive write down from Dow component Citigroup. Asian markets also made solid gains.
Top performing sectors in Europe were the retail sector, banks, construction, travel and leisure and financial services, all rebounding from heavy selling during the recent market correction.
The retail sector was pushed higher by the upbeat statements of Tesco officials after the company reported a slowdown in growth in its core British market in the first six months.
"We do see it more as a temporary blip than a structural problem with the UK consumer," Christopher Hogbin, from Sanford C. Bernstein, told "European Closing Bell."
Room for Growth
Hogbin said there was still room for growth in the company's shares: "We still see material upside from the current level. Tesco continues to seem cheap."
In the British media sector, the U.K.'s competition regulator said satellite broadcaster BSkyB's 17.9% stake in commercial broadcaster ITV restricted competition and was not in the public interest.
Meanwhile, shares of Credit Suisse and UBS were higher by 2.9% and 3.9% respectively as investors hoped all the subprime- and credit-related losses for the banks were finally out in the open.
Worst-performing sectors were the basic resources and oil and gas, with oil prices falling from record highs and traders wondering if the decrease suggests a long-term trend or a temporary one caused by the stronger dollar.
In economic news, euro zone producer prices growth for August came in line with expectations, but non-durable goods prices saw a sharp jump, European Union statistics showed.
And the specter of gas cuts in winter was raised again with Russian oil and gas giant Gazprom saying it would cut supplies to Ukraine if Kiev does not agree repayment terms on $1.3 billion in debts for earlier deliveries.