Car makers help drive European indices higher

Eurostoxx 50:2,036.64 (+41.63) Frankfurt DAX:5,166.36 (+94.03) Paris CAC:2,894.93 (+40.12)

EUROPEAN STOCKS rose for the first time in three days yesterday, with the benchmark Stoxx Europe 600 Index rebounding from a two-year low, as banking shares and car makers advanced.

Cairn Energy had the largest drop on the Stoxx 600, after abandoning its second oil well in less than two months.

The Stoxx 600 jumped 0.9 per cent to 220.87 at the close in London, having swung between gains and losses more than 10 times yesterday.

“Some buying is slowly materialising as some of the cheap prices some stocks are trading at now are slowly becoming irresistible to some traders,” said Markus Huber, head of German sales trading at ETX Capital in London.

“As long as there is no fundamental change in regard to the European financial crisis and the stalemate in the USA continues to persist, every recovery should be rather short lived.”

Rallies Société Générale jumped 15 per cent to €17.90, its biggest gain since May 2010, as France’s second-largest lender erased an earlier slump of as much 8.1 per cent.

Banking shares were the best performers as a group in the Stoxx 600, rising 3.6 per cent.

Deutsche Bank, Germany’s biggest bank, advanced 8.2 per cent to €23.15 while UniCredit, Italy’s largest lender, rose 7.4 per cent to 73.7 cent.

BMW and Daimler, makers of luxury cars, advanced 2.1 per cent to €51.95 and 2.1 per cent to €32.43, respectively.

Car makers were among the best performers in the Stoxx 600 yesterday, climbing 2 per cent.

PSA Peugeot Citroen rose 2 per cent to €16.85. CEO Philippe Varin told Le Figaro in an interview that the company has no choice other than to accelerate cost cuts in the face of deteriorating market prospects.

Mitchells and Butlers surged 6.5 per cent to 251p as the UK owner of Harvester and Toby Carvery pubs and restaurants said that Piedmont’s possible 230p a share bid “significantly” undervalues the company.

Deutsche Boerse jumped 3 per cent to €40.18. NYSE Euronext and Deutsche Boerse plan to make about €200 million, or half of the proposed cost cuts from their combination, through technology and clearing savings, a regulatory filing showed. – (Bloomberg)