European stocks rally for third day, led by auto sector

The German DAX Index graph is pictured during a trading session at Frankfurt's stock exchange in Frankfurt. ― Reuters pic
The German DAX Index graph is pictured during a trading session at Frankfurt's stock exchange in Frankfurt. ― Reuters pic

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BERLIN, Sept 23 — European stocks rallied for a third day as global sentiment improved on easing concerns about cash-strapped developer China Evergrande, while car parts makers surged after earnings update from Faurecia.

The pan-European STOXX 600 index rose 1.3 per cent, looking to end the week with solid gains after a sharp selloff on Monday. Technology and auto stocks were the top gainers, rising more than 1.5 per cent each.

Asian stocks rose after Evergrande surged 30 per cent in Hong Kong markets as its chairman sought to reassure investors after the company’s unit said it had “resolved” a coupon payment on an onshore bond.

However, the property developer’s Frankfurt-listed shares tumbled 19.5 per cent.

“It was a bit of a September panic,” said Will James, fund manager of Premier Miton European Equity Income. “It’s a big issue but it’s not necessarily one which will spillover beyond Evergrande and the Chinese property sector.”

“We are at a point where we’ve had an aggressive COVID recovery, we’re past peak growth and there’s a question mark over the end of QE (quantitative easing). The problem with liquidity pulled out of the market brings with it the potential for more volatility.”

A survey showed euro zone business activity grew at its weakest pace in five months in September as curbs to limit the Delta variant of coronavirus hit demand and supply-chain constraints pushed input costs to a more than two-decade high.

UK’s blue-chip FTSE 100 lagged regional indexes with a 0.5 per cent rise ahead of the Bank of England’s policy decision.

The central bank is expected to keep the interest rate steady as it approaches the end-point of its £895 billion (RM5.1 trillion) asset purchase programme.

The US Federal Reserve said on Wednesday it will likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected.

Boosting the auto sector, French car parts company Faurecia jumped 6.4 per cent as a strong cash flow guidance outweighed lowered 2021 financial targets due to a sharp reduction in worldwide automotive production.

Rivals Valeo gained 5.4 per cent and Continental added 4.4 per cent after a recent bout of weakness in the sector.

French vaccine maker Valneva climbed about 10 per cent after it said it was expanding trials of a Covid-19 vaccine candidate and remains in talks with the European Commission over a potential contract. — Reuters

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