European markets close higher; Brexit pressure; Capita up 15%

  • Bourses in Europe were higher Tuesday
  • Investors watch out for political events and digest fresh data while waiting for the outcome of a 2-day Federal Reserve meeting.
  • U.K. inflation rose to 2.9% in May

Bourses in Europe closed higher on Tuesday as investors took comfort in Britain's ongoing political developments and positioned themselves ahead of the Federal Reserve's two-day meeting starting today.


The pan-European Stoxx 600 closed 0.53 percent higher, with all sectors bar telecoms trading in positive territory.

Markets in the U.S. meanwhile were in the black territory, paring some of the losses caused by lagging technology stocks in recent days.

Technology stocks in Europe were among the strongest performers in afternoon deals, lifting the sector 1.15 percent. The boost was led by a rebound for Dialog Semiconductor which, though trading at the bottom of the benchmark on Monday, was up 4.7 percent in Tuesday deals. Austria Microsys was also up almost 1.9 percent.

The sector was joined at the top by financial services, which was also up almost 1.5 percent. LSE Group rose 5.3 percent after making a bullish prediction for its outlook between now and 2019 despite Brexit talks and collapse of a merger with its German rival.

Italian banks were higher after the country's economy minister Pier Carlo Padoan said a deal to rescue two Italian banks is close. Ubi Banca was up by 3.4 percent.

Media stocks and health care were also higher in afternoon deals. Cable operator Altice USA will be valued at up to $22 billion after announcing details of its stock market listing. Shares of the Netherlands-based Altice NV were slightly higher. Meanwhile, Morgan Stanley said it is confident that Luxottica and Essilor will create a global eyewear powerhouse. They later rose more than 1.3 percent and 2.5 percent respectively.

The British outsourcing group Capita said Tuesday it intends to grow profitability and secure further contracts in the second half of the year. The announcement took the stock to the top of the European benchmark, up by 15 percent.

Shares of Petrofac increased 3.7 percent. It announced a five-year contract with Kuwait Oil Company worth $35 million.

On the other hand, Merlin dropped 2.6 percent after stating that recent terrorist events in Manchester and London could hit its tourist attractions.

Brexit and data

Prime Minister Theresa May held talks with DUP members in an effort to form a deal that will allow her to obtain a parliament majority. May refused to make any comments following the meeting, as she made her way to meet French President Emmanuel Macron in Paris. However, the BBC has reported that a deal has been "largely agreed".

Nonetheless, Brussels is urging the U.K. to sort out its politics fast to allow Brexit negotiations to start rapidly.

"My preoccupation is that time is passing, it is passing quicker than anyone believes because the subjects we have to deal with are extraordinarily complex," the EU's chief Brexit negotiator told the Financial Times.

Data released Tuesday morning showed U.K. inflation reaching 2.9 percent year-on-year in May - a four-year high.

In corporate news, Allied Irish Banks intends to raise up to $3.7 billion when it sells a 25 percent stake on the Dublin and London stock exchange.

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Oil prices moved lower on Tuesday following an OPEC report showing a 1 percent production increase in May in comparison to the previous month despite an output cut deal.

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