European stocks close higher on earnings, Peugeot soars 14.9%

  • PSA Peugeot shares climbed to the top of the pan-European Stoxx 600 after the firm's earnings beat expectations.
  • UBS shares also rose after the bank reported a 9 percent increase in net profit during the second quarter.
  • Business activity in the euro zone dropped in July, according to data released by IHS Markit Tuesday.

European markets closed higher on Tuesday, bouncing back from the weak sentiment seen in the previous session.

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The pan-European Stoxx 600 closed provisionally up 0.86 percent with almost every sector in the black. The benchmark reached a five-week intraday high.

Basic resources led the gains on Tuesday, rallying 4.78 percent, with the sector on track for its best day since President Donald Trump's election victory in November 2016. Meanwhile, autos stocks climbed 2.59 percent.

Trump is set to meet with European Commission President Jean-Claude Juncker on Wednesday, where the two will negotiate the U.S. president's tariffs on EU imports. Ahead of the meeting, Trump tweeted: "Tariffs are the greatest! Either a country which has treated the United States unfairly on trade negotiates a fair deal, or it gets hit with tariffs. It's as simple as that."

On Wall Street, stocks opened higher, as traders digested strong corporate earnings reports led by Google-parent Alphabet. The tech giant reported second-quarter earnings that showed a big bottom-line beat on estimates.

Earnings

Earnings were the biggest driver on Tuesday. PSA Peugeot saw its shares touching its highest level since around the summer of 2008, after reporting its latest results. The company announced an increase in profit that beat expectations. The stock was up 14.88 percent.

UBS shares also rose 4.32 percent on Tuesday after reporting a 9 percent increase in net profit during the second quarter, to 1.28 billion Swiss francs ($1.29 billion), up from a year ago.

In other corporate news, Spectris reported first-half sales had risen 3 percent to £728 million. But the measurement tool maker warned the pace of organic sales growth would slow down slightly in the second half. Spectris was the worst performing individual stock Tuesday, down 9.269 percent.

Market sentiment was also impacted by news that China's State Council is ready to deliver a more "vigorous" fiscal policy as the economy cools.

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Business activity in the euro zone dropped in July, according to data released by IHS Markit Tuesday. A purchasing managers index (PMIs) for the euro area came in at 54.3 in July from 54.9 in June — this was the second weakest performance since November of 2016.