European Stocks Close Higher As Strong Earnings Lift Sentiment

(RTTNews) - European stocks closed higher on Monday as optimism around earnings and economic reopening outweighed data showing signs of slowing growth in China.

Data showing continued expansion of the euro area manufacturing sector growth and stronger-than-expected increase in Germany's retail sales helped as well.

Markets also reacted positively to news that the U.S. Senate has finalized the text of its $1 trillion bipartisan infrastructure bill. The legislation will next be introduced to the Senate.

The pan European Stoxx 600 climbed 0.59%. The U.K.'s FTSE 100 advanced 0.7%, France's CAC 40 surged up 0.95% and Germany's DAX edged up 0.16%. Switzerland's SMI gained 0.45%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Portugal, Russia, Spain, Sweden and Turkey all closed higher, while Poland edged down marginally.

In the UK, market, shares of Meggitt soared nearly 60% after the aerospace company agreed to a takeover offer from Parker-Hannifin Corp.

Melrose Industries surged up 5.2%. Rolls-Royce Holdings, Anglo American Plc, IAG, Burberry Group, JD Sports Fashion, M&G, RightMove and St. James Place gained 2 to 4%. ITV, Rio Tinto, British Land Company, Antofagasta, Land Securities and Sage Group also moved up sharply.

Natwest Group shares gained about 1% after the company unveiled plans to distribute capital to shareholders.

Pearson Plc shares tumbled nearly 5%. Smith & Nephew declined 1.6%, while HSBC Holdings ended with a modest loss despite reporting strong first-half proft.

In the French market, AXA gained more than 4% after reporting higher revenues across its global insurance and reinsurance business, driven by improving pricing and market conditions.

Air France-KLM also gained about 4%. Essilor, Carrefour, Renault, Unibail Rodamco, Kering, Danone, LVMH, LOreal, Capgemini, WorldLine, Valeo and STMicroElectronics gained 1 to 3%.

ArcelorMittal, Air Liquide, BNP Paribas and Technip ended weak.

In the German market, Infineon Technologies gained more than 4%. Vonovia moved up sharply after nudging up its offer for rival real estate company Deutsche Wohnen SE to about 19.1 billion euros ($22.7 billion).

Adidas, Daimler and Siemens gained 2 to 3%. BMW, Puma and Continental also ended with strong gains.

Allianz declined more than 7% after the company said earnings could be materially hurt by a U.S. Justice Department investigation into its Structured Alpha Funds that have been linked to investor losses during the coronavirus-related market downturn early last year.

Fresenius Medical Care ended lower by more than 3%, while Beiersdorf, HeidelbergCement, Deutsche Bank and Fresenius shed 1 to 1.4%.

In economic news, the euro area manufacturing sector growth moderated in July but the pace of expansion remained elevated, final data from IHS Markit showed.

The final factory Purchasing Managers' Index fell to 62.8 from 63.4 in June. This was the lowest reading since March. But the reading was above the flash 62.6 and the sector has recorded successive months of expansion since July 2020.

Germany's retail sales growth exceeded expectations in June as the relaxation of restrictions related to the pandemic supported consumer demand, data from Destatis revealed. Retail sales grew 4.2% month-on-month in June, much faster than the economists' forecast of 2%. Nonetheless, the latest increase was slower than the 4.6% growth logged in May.

Elsewhere, Britain's factories reported a further slowing of growth in July due to shortages and supply chain problems caused by the COVID-19 pandemic, in line with expectations.

The UK manufacturing sector growth slowed in July as supply gridlock resulted in a moderate deceleration in the rates of expansion of production, new orders and job creation, final survey results from IHS Markit showed on Monday.

The Chartered Institute of Procurement & Supply manufacturing Purchasing Managers' Index came in at 60.4 in July, in line with flash estimate, but down from May's record high of 65.6. Nonetheless, the index signaled expansion for 14 months.

The Bank of England looks set to raise its forecasts for inflation on Thursday, at the end of its August meeting.

According to data released by the Federal Statistical Office, Switzerland's consumer price inflation rose marginally in July, with the index growing 0.7% year-on-year in July, following a 0.6% increase in June. This was in line with economists' expectation.

The core CPI rose 0.2% yearly in July and fell 0.2% from the previous month.

Another data showed Switzerland's retail sales increased by 0.1% year-on-year in June. On a monthly basis, seasonally adjusted retail sales declined 3.5% in June.