Markets

Europe finishes on a high, as oil climbs and trade concerns alleviate 

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Key Points
  • The pan-European Stoxx 600 rose 0.72 percent provisionally by the close, having reversed losses seen earlier on. Almost all sectors ended in positive territory, with the exception of banks, which saw some slight pressure.
  • The U.S. demanded all countries stop imports of Iranian oil from November on Tuesday, exacerbating concerns about a shortage of crude at a time when Venezuela’s production is in freefall and the market is grappling with short-term disruptions from Canada and Libya.

European markets closed Wednesday's session in the black, as investors cheered on the rally in oil prices and trade news out of the U.S. that was less harsh than previously predicted.

The pan-European Stoxx 600 rose 0.72 percent provisionally by the close, having reversed losses seen earlier. Almost all sectors ended in positive territory, with the exception of banks, which saw slight pressure.

Major European bourses also bounced back, with the U.K.'s FTSE 100 rising 1.11 percent, the French CAC 40 popping 0.87 percent and the German DAX finishing up 0.93 percent. The region was given a lift, on the back of Wall Street trading higher during its morning session.

Talk of trade

Trade continued to throw markets Wednesday, with Europe having started the session in the red, before turning positive in afternoon trade. Sentiment was lifted following news that the U.S. administration had issued new information on foreign investment.

Instead of barring businesses with 25 percent or more Chinese ownership from purchasing U.S. tech-related groups, the government will rely on the U.S. Committee on Foreign Investment to deal with issues concerning foreign purchase of domestic technologies that are deemed sensitive, an administration official said Wednesday.

The news was received positively from markets around the world, as they are deemed less strict than suggestions thrown about earlier on this week. While markets took the news positively, fears of a potential trade war between the U.S. and other major economies, continues to keep investors on edge.

Oil rallies

Earlier in the session, banks were down more than 1.2 percent as investors fretted over the potential impact of protectionism on the economy, with the autos sector — a prominent target of President Donald Trump's higher U.S. tariffs — also feeling the heat. However, the most recent news coming out of the U.S. has appeared to perk up sentiment, giving a slight boost to all sectors. By the close, banks were off 0.02 percent, having erased most of its losses, while autos closed higher.

Energy was the top performing sector, which soared 2.5 percent overall, lifted by news that the U.S. demanded Tuesday that all countries stop imports of Iranian oil from November. The move exacerbated concerns about a shortage of crude at a time when Venezuela’s production is in free fall and the market is grappling with short-term disruptions from Canada and Libya.

Oil prices climbed even further Wednesday afternoon, following data from the EIA that showed that U.S. stockpiles had fallen by almost 10 million barrels last week, with Brent crude and U.S. WTI both up 2 percent or more at the European close. Tullow Oil was the sector's biggest gainer, closing up 8.1 percent.

VIDEO4:2804:28
Oil up as U.S. tells allies to cut Iran oil imports

Looking at individual companies, Imerys climbed 4 percent after Exane BNP Paribas upgraded its stock recommendation to "outperform." Following a stellar session Tuesday, Eurofins Scientific continued with its positive streak, rising 7.4 percent after Jefferies raised its rating on the stock from "hold" to "buy."

Rubis slumped towards the bottom of the index, closing down over 5 percent, after Berenberg cut its price target for the stock to 62 euros from 67 euros. Meantime, 1&1 Drillisch sank 9.1 percent after Commerzbank cut its rating on the stock to "hold" from "buy." Elsewhere, Czech utility group CEZ traded ex-dividend, so shares slipped 5.74 percent.

On the data front, confidence among French consumers fell to its lowest level in nearly two years in June as concerns over inflation and personal finances slowed momentum. Elsewhere, morale among Italian businesses rose after a new government was formed after months of political stalemate.

—CNBC's Jeff Cox contributed to this report