LONDON (Reuters) – European stocks rose on Monday as industrial activity in China picked up, another sign of recovery from the coronavirus pandemic that added hope that the world economy would return to health as well.
FILE PHOTO: The London Stock Exchange Group’s offices are located in the City of London, UK, December 29, 2017. REUTERS / Toby Melville
The broader Euro STOXX 600 rose 0.6%, with London’s FTSE bending 1% and European oil and gas shares .SXEP climbed 2% on rising oil prices.
Shares in BP (BP.L) and Royal Dutch Shell (RDSa.L) rose 3.4% and 2.7% respectively to Saudi Aramco (2222.SE) raised optimism about a growth in Asian demand and Iraq promised to further reduce supply. [O/R]
Deflation at factories in China demanded in July, data showed, driven by rising global energy prices and as industrial activity climbed back to pre-coronavirus levels.
Industrial output in the world’s second-largest economy is slowly returning to levels seen before the pandemic paralyzed enormous swathes of the economy, driven by rising demand, government stimulus and surprisingly real exports.
That bodes well for the global recovery from the coronavirus pandemic, marketers said.
“China is so advanced in this process of lockdowns and outbound lockdown that all the good signs for the Chinese economy are essential (for the world economy),” said Florian Ielpo, head of macroeconomic research at Unigestion.
The MSCI world stock index .MIWD00000PUS, which tracks stocks in 49 countries, gained 0.1%. Wall Street futurometers ESc1 pointed to a positive start.
But progress was controlled by tensions between the United States and China. Uncertainty about a deal on a U.S. incentive package also weighed on markets
US President Donald Trump signs bans on Chinese social media platforms WeChat – owned by Chinese tech giant Tencent (0700.HK) – and TikTok begin next month, imposing sanctions on 11 Hong Kong and Chinese officials.
U.S. regulators also recommend that overseas companies listed on U.S. exchanges be subject to U.S. 2022 U.S. public audits.
US-China tensions have raised concerns about a detrimental impact on trade talks. Any friction here could complicate the global recovery from the coronavirus pandemic, investors said.
Underscoring concerns, European tech stocks .SX8P lost 0.8% on tensions between Washington and Beijing, the only sector to fall in early trade.
Earlier, Asian stocks outside Japan saw .MIAPJ0000PUS in holiday-thin trading, staying below a high of six and a half months last week. They were last up 0.1%.
Waiting for WASHINGTON
Further causing further uncertainty for investors are ongoing talks in Washington over a U.S. fiscal stimulus package that has rocked the U.S. dollar.
Second Chamber member Nancy Pelosi and Treasury Secretary Steven Mnuchin on Sunday said they were open to resuming talks on aid.
Trump has sought to take matters into his own hands, signing executive orders and memoranda focusing on unemployment benefits, layoffs, student loans and payroll taxes.
With investors worried that the recovery of the US could lag behind those in other major economies, the two-year supremacy of the dollar has slipped.
Against a currency exchange rate, the dollar was a fraction stronger at 93.339 = USD and still just above a two-year trough.
“The fresh stimulus provided by President Trump through executive orders is better than none at all and offers a stop gap solution,” analysts at MUFG in London wrote.
For Reuters Live Markets blog on European and UK stock markets, click on: [LIVE/]
Report by Tom Wilson, edited by Larry King
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