European markets extend comeback to close higher but October losses weigh

Key Points
  • The pan-European Stoxx 600 had risen more than 1.7 percent by the close, with all sectors in positive territory. France's CAC 40 index led the gains among the major bourses, trading more than 2.2 percent higher.
  • Despite the gains, the Euro Stoxx 600 finished October down 5.6 percent
  • Sterling rallied after a government letter was published that suggested the U.K. believed that the Brexit withdrawal agreement will be finalized within 3 weeks.

European stocks rallied Wednesday as investors digested further corporate earnings and took advantage of heavy selling during October.

The pan-European Stoxx 600 provisionally rose 1.74 percent over the session, with all sectors in positive territory. France's CAC 40 index led the gains among the major bourses, trading more than 2.3 percent higher.

Europe's basic resources stocks were the top performers, surging almost 3.6 percent higher amid stronger-than-anticipated earnings news.

Despite the late-October rally, Britain's FTSE 100 is down about 5 percent for the month, the Euro Stoxx 600 down 5.6 percent while the S&P 500 in the United States has lost almost percent.

Looking across the European benchmark, L'Oreal rose towards the top of the European benchmark, after reporting higher third-quarter sales from a year ago. Shares of the Paris-listed stock jumped 6.7 percent on the news.

Standard Chartered also rose 3.2 percent after reporting a jump in profits from a year ago. Banco Santander shares ended up 2.1 percent after third-quarter profits surged.

Meanwhile, tire maker Nokian Renkaat slumped towards the bottom of the index after cutting its outlook on the back of lower third-quarter sales. The Finnish company sank 10 percent during mid-morning deals.

A rebound on Wall Street helped push equity markets up on Wednesday. U.S. stocks erased some of the steep losses seen in October thanks to strong performances in both communications and consumer discretionary stocks.

Brexit date

The U.K.'s Brexit secretary has told lawmakers in a letter that he expects the country's exit deal with the EU can be finalized by November 21.

Sterling spiked following the news and was up more than 0.4 percent versus the dollar as the European closing bells rang.

The letter, dated October 24 but published Wednesday, further stated that "the end is now firmly in sight and, while obstacles remain, it cannot be beyond us to navigate them."

Euro zone inflation rises

On the data front, euro zone inflation accelerated to 2.2 percent in October, Eurostat reported Wednesday. The uptick from 2.1 percent in the month prior provides further rationale to the European Central Bank's (ECB) decision to dial back stimulus even as growth in the bloc runs out of steam.

In the meantime, investors will keep monitoring developments between Brussels and Rome. The European Commission told Italy on Tuesday that its large debt pile is a concern for the entire region.