European equity markets recovered yesterday from losses in the previous session as a rebound in Banco Espirito Santo and in mining stocks lifted the region’s bourses.
The pan-European FTSEurofirst 300 index, which had slipped 0.4 per cent on Tuesday, closed up 1.3 percent at 1,376.32 points. The eurozone’s blue-chip Euro STOXX 50 index advanced 1.6 per cent to 3,202.94 points.
Banco Espirito Santo (BES) rose nearly 20 per cent, after hitting record lows on Tuesday, enabling Lisbon’s benchmark PSI-20 index to advance by 3.1 per cent.
Traders said that even though BES remained dogged by the fact that a holding company of the bank’s founding family had failed to repay a $1 billion loan, some investors were now starting to think the stock represented a rela-tive bargain.
They added that BES was also benefiting from an extension to a ban on short-selling on its shares − or betting on future falls in a share price – and from expectations among investors that it could raise more capital if necessary.
“It’s a storm in a teacup. It’s something that is specific to Portugal, rather than having broader repercussions across the eurozone,” said Terry Torrison, managing director at Monaco-based Mc-Laren Securities.
Shares in planemaker Airbus fell 2.5 per cent, which traders attributed to Qatar Airways’ decision to seek compensation from Airbus for delays in delivery of three of the European planemaker’s A380 superjumbos.
It’s a storm in a teacup. It’s something that is specific to Portugal, rather than having broader repercussions across the eurozone
However, mining stocks rallied after Chinese economic growth data slightly beat expectations, hinting at resilient demand in the world’s largest metals-consuming country.
The STOXX Europe 600 Basic Resources Index - which houses mining companies - rose 2.8 per cent, beating a 1.3 per cent rise on the broader, pan-European STOXX 600 index .
China, the world’s second-largest economy, grew 7.5 per cent in April-June from a year earlier, the statistics bureau said yesterday, just ahead of a median forecast of 7.4 percent in a Reuters poll.
“There’s a close correlation between Chinese industrial production and the mining sector, so this pick-up is encouraging,” said Coutts global equity strategist James Butterfill.
The FTSEurofirst 300 is still up around 3 per cent since the start of 2014, while the Euro STOXX 50 is up around 2 per cent.