Europe Markets

Europe ends sharply higher as supermarkets, Glencore soar

Europe ends higher; supermarkets soar

European stocks finished sharply higher Wednesday as equity markets rallied globally at the end of a torrid month.

The pan-European STOXX 600 extended gains by the close, finishing up 2.4 percent. However, the index ended September down nearly 3 percent on the month.

London's FTSE 100 index ended up 2.6 percent, bolstered by supermarkets and London-listed miners.It was down nearly 3 percent on the month.

The German DAX rose 2.2 percent on the day, but ended September 5.8 percent lower than at the start of the month.

Following the same trend, the French CAC closed up around 2.6 percent on the day but 4.3 percent down on the month.

On Wednesday, Europe followed the positive lead set by Asian stocks, which mostly advanced, while U.S. stocks too jumped in an attempt to ease the pain of the worst quarter in four years.

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Investors have had a tough time these last three months, with commodity prices sliding further, continued speculation about when the U.S. Federal Reserve will raise interest rates and intensifying concerns about the Chinese economy.

"It is against this backdrop that global equities have fallen sharply, and combined with the scandal surrounding Volkswagen, amid concerns that its peers could well get dragged into the whole imbroglio, investors are voting with their feet and reverting to cash and other safer havens," Michael Hewson, chief market analyst at CMC Markets, said in a note Wednesday.

Supermarket chains jump

Retail stocks led the pack on Wednesday in European trade.

Shares in Sainsbury's surged nearly 14 percent by the close, after the British supermarket chain said that its full year profit is expected to be ahead of market consensus. The announcement lifted other names in U.K. space, including Tesco and Morrisons, which both gained over 6 percent.

Shares in Glencore surged for a second consecutive day, closing around 14 percent higher on Wednesday after the London-listed miner said it had taken "proactive steps" to withstand commodity market conditions and had no solvency issues. This follows a rout in the stock that meant it closed September down 38 percent on the month.

On Wednesday, Glencore's rally boosted other names in basic resources. Rio Tinto got a 2.8 percent bump, while BHP Billiton closed 2.7 percent up.

Oil companies also ouperformed, with SBM Offshore closing up 4 percent and Statoil up 3.2 percent.

Auto names were significantly higher after China said it has halved sales tax on small cars, a move likely to benefit the likes of embattled German carmaker Volkswagen.

On Wednesday, Volkswagen UK said around 1.2 million vehicles in Britain were affected by the emissions software scandal. In addition, VW-owned Porsche named Oliver Blume as its new chairman of the executive board. Shares in Volkswagen closed 2.7 percent up.

Other carmakers also got a boost, with Peugeot Citroen and Germany's BMW closing up 6.4 and 3.7 percent, respectively.

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On the data front, the U.K. Office for National Statistics revised down its estimate for gross domestic product (GDP) growth in the second quarter to 2.4 percent year-on-year from an earlier reading of 2.6 percent. On the quarter, second quarter GDP grew 0.7 percent.

Euro zone prices fell year-on-year in September for the first time in six months, according to the European Union's statistics office Eurostat. Consumer prices in the single-currency bloc fell 0.1 percent this month, highlighting the continued risk of deflation. Separately, jobs data released by Eurostat showed August's unemployment rate for the euro zone was 11 percent.