(Bloomberg) -- European stocks climbed back toward a record high, lifted by a fresh wave of stimulus from China to revive its economy.
The Stoxx Europe 600 Index was 0.6% higher as of 12:55 p.m. in London after China’s central bank unleashed an unprecedented blitz of policy support for the economy. Miners led the charge in Europe, with Anglo American Plc rising as much as 8.3% on back of a spike in iron ore prices. Luxury goods companies, including LVMH, Hermes International SCA and Kering SA, also rose sharply.
The index now stands about 1% off the record highs touched in August.
China’s move “is impacting the European laggards exposed to China such as luxury, automotive or miners that are leading the stock market,” said Ariane Hayate, a fund manager at Edmond de Rothschild Asset Management.
However, Chinese authorities had stopped short of announcing any measures to boost consumer spending, which would “be a clear catalyst to the luxury sector,” Hayatte noted. “The sector is today very cheap in terms of valuation but continues to face cuts in earnings,” she added.
European shares could find it tricky to extend their gains much, Goldman Sachs Group Inc. strategists said, seeing the market at risk of a setback from the continent’s slowing economy. While traders are ramping up bets on an October interest-rate cut from the European Central Bank, Goldman told clients sluggish growth could outweigh the impact of lower rates.
Investors are now focusing on how fast and how far the Federal Reserve could move on rates cuts following last week’s reduction. They will be closely watching data on the Fed’s preferred price metric and US personal spending later this week.
Among other movers, Commerzbank AG bounced as much as 6% after sliding on Monday when Germany expressed its opposition to a takeover by Unicredit SpA. AMS-Osram soared as UBS upgraded the stock to buy and Smiths Group fell 7% as 2024 preliminary results underwhelmed.
For more on equity markets:
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- US Stock Futures Little Changed; Deere, Bank of America Fall
- Third Time’s the Charm?: The London Rush
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--With assistance from Michael Msika and Julien Ponthus.
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