European Stocks Bounce Back from Losing Streak
European stocks rose slightly Tuesday, snapping a three-day losing streak, as investors embraced some upbeat earnings reports from the likes of Swiss Reinsurance and U.K. retailer Marks & Spencer.
Earnings helped shore up sentiment Tuesday but traders were quick to point out that the overall mood remains one of caution in the face of renewed subprime exposure worries.
"Valuations are not a concern at the moment. The bigger issue is whether earnings are secure and most companies are issuing decent earnings updates," said Andrew Kelly at Cartesian UK Opportunities Fund in London.
Swiss Reinsurance rose 0.9 percent, pacing an advance by insurance stocks. The world's largest reinsurer reported a 5 percent drop in third-quarter net profit but said it was on track to reach its goals for 2007 and beyond, and reiterated that it will pursue takeovers in the closed life insurance business.
Marks & Spencer shares added 3.3 percent after the U.K. food and clothing retailer reported a better-than-expected 12 percent rise in fiscal first-half underlying profit and unveiled a 1 billion pound (1.44 billion euros; $2.1 billion) share buyback plan as well as a major investment program that encompasses China and India.
Germany's Commerzbank rose 1 percent and helped bolster sentiment in the beleaguered financial sector after it said that third-quarter net profit rose 56 percent on higher tax-loss carry forwards than last year, which offset a 291 million euros ($421.6 million) writedown on subprime exposure. The bank also said it is sticking by its profit targets for the year.
Mining stocks made big gains as gold and silver futures hit multi-decade highs on speculative and investment buying. The weaker dollar and a sharp rise in oil prices is also providing underlying support for metals.
In London, Rio Tinto surged 3.3 percent, while Xstrata rose 3.1 percent. BHP Billiton soared 4.4 percent.
"We continue to like the fundamentals associated with commodities. Demand growth from China remains robust and supply remains constrained across a number of key commodities due to permitting difficulties, availability of capital equipment and shortages of labor," said Neil Denman, investment analyst at Hexam Capital in London.
German pharmaceutical and drug company Bayer slipped 0.7 percent despite posting better-than-expected third-quarter operating profits and announcing a restructuring plan for its plastics unit. Analysts expressed some disappointment at results from the HealthCare unit, saying its performance was burdened by higher investment costs and changes in the product mix.
Automaker BMW sagged 3.3 percent after it reported a 78 percent increase in third-quarter profit but said its pretax profit rose just 6 percent, well below what was expected by analysts polled by Dow Jones Newswires.