(Reuters) – A surge in oil and tobacco stocks helped European stocks close higher on Tuesday, with major indices partially recovering from a sell-off sparked by fears of further lockdowns as COVID-19 cases climb across the continent.
The pan-European STOXX 600 index .STOXX rose 0.2% after Monday’s 3.2% drop, while the German DAX .GDAXI was up 0.4% and the Italian FTSE MIB .FTMIB gained 0.5%.
The FTSE 100, heavy for UK exporters .FTSE added 0.4%, benefiting from a weaker pound after Prime Minister Boris Johnson told people to work from home if possible and ordered bars and restaurants to close early to fight a second wave of infections rapidly spreading. [.L]
Royal Dutch Shell, oil majors listed in London RDSa.L and BP BP.L jumped nearly 3% as crude prices rose amid expectations that renewed restrictions would have only a limited impact on fuel demand.
The UK midcap index .FTMC, made up of companies more focused on the domestic market, lost 0.3%.
“Many of these measures will disproportionately affect a portion of consumer spending (mainly services such as recreation, entertainment, tourism),” Berenberg economist Holger Schmieding said in a note. “We expect these measures will slow down temporarily but not derail the overall economic recovery.”
The data shows that consumer confidence in the euro area fell to -13.9 in September from -14.7 in August, the European Commission said, while the Ifo Institute revised its forecast for Germany, forecasting a 5.2% drop in GDP this year, an improvement from its last projection of a 6.7% decline.
Numerous rating actions have also helped, with British American Tobacco BATS.L gaining 4.1% and Imperial Brands IMB.L up 3.2% after RBC upped its ratings to “outperform”.
Danish shipping company AP Moeller Maersk MAERSKb.CO jumped 5.2% after JPMorgan upgraded the company to “overweight.”
Travel and leisure stocks .SXTP fell 1.1%, adding to a 5.2% drop in the previous session, as the surge in COVID-19 cases across Europe threatened to hurt travel demand again.
Whitbread, owner of the Premier Inn WTB.L slipped 2.8% after announcing plans to cut 6,000 jobs at its hotels and restaurants due to the pandemic’s impact on the industry.
British Beazley BEZG.L said he expected pandemic-related claims to double to $ 340 million, lowering his shares by 14.1%. The insurance industry in Europe .SXIP was down 1.6%.
Airbus SE AIR.PA fell 2.7% after CEO Guillaume Faury told French radio that the situation with airlines was worse than expected.
German Bank DBKGn.DE slipped 1% after an executive told Reuters he planned to close one in five branches in Germany.
Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Pravin Char