Bounce in European shares as investors eye Fed minutes

Global stocks advanced on Wednesday as investors await minutes from the US Federal Reserve’s July meeting for signs of future rate cuts. Dublin outperformed its European peers despite a slow day in terms of news flow. The pan-European Stoxx 600 index ended at a two-week high on the day.

Dublin

The Iseq all-share index advanced 1.79 per cent on the day with advances for companies including Kingspan and CRH.

Ryanair lost ground on Wednesday despite succeeding in getting an injunction to prevent strike action by its Irish-based pilots. The airline fell 1.09 per cent in Dublin to €8.50 as the British courts decided against preventing similar strike action in the UK.

Hostelworld was among the biggest losers in the day, dipping 16.43 per cent on its Irish listing to €1.63. In an update, the company said it had seen revenue fall during the peak summer period as booking demand failed to live up to expectations.

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Cairn Homes had a particularly strong day despite there being no stock specific news. With about 8.7 million shares traded, the housebuilder rose 4.3 per cent to €1. Peer Glenveagh Properties also had a good day, rising 1.4 per cent to €0.65.

It was a mixed day for financials, with Bank of Ireland rising 2.22 per cent to €3.32 while rival AIB dropped 1.21 per cent to €2.28.

London

The main London index added 1.1 per cent to post its largest gains in nearly three weeks, with a boost from Shell and BP helping the index recover most of the previous session's losses.

The mid-cap FTSE 250 also rose by the same level. BAT, AstraZeneca and other stocks that book a major chunk of their earnings in dollars gained from a fall in sterling as investors took little heart from hints by German chancellor Angela Merkel that there might be room for Brexit negotiation as chances of a no-deal grow.

Merging mid-cap lenders OneSavings and Charter Court Financial gave up 5 per cent and 4.6 per cent respectively, after they warned of the Brexit impact on housing and credit.

Outsourcing group Capita surged 3 per cent after Goldman Sachs upgraded the stock. Small-cap Nostrum Oil & Gas plummeted 22 per cent to an all-time low after Berenberg slapped the stock with a double downgrade on its rating

Europe

The pan-European Stoxx 600 index ended 1.2 per cent higher with Milan’s blue-chip index rising 1.8 per cent, bouncing back from a political crisis-driven sell-off.

On the corporate front, auto stocks got a boost from reported merger talks between Fiat Chrysler and Renault.

Italian newspaper Il Sole 24 Ore reported that talks between the French and Italian-American car-makers may be back on the table, after a proposed multibillion-dollar merger collapsed in June. The European auto sector has been hit by a global auto slowdown with car sales plunging as the sector battles with the transition to electric and other alternative-fuel vehicles.

Among individual stocks, Pandora shares rallied for a second straight session, up 16 per cent, with Wednesday's move attributed by traders to a reported purchase of 24,400 shares by chief financial officer Anders Boyer.

Interest-rate sensitive banks made the smallest gains with lender-heavy Madrid stocks lagging regional peers.

New York

Big-box retailer Target surged 18.2 per cent, the most on the S&P 500 index, after it beat quarterly profit estimates and raised its annual earnings forecast.

Home improvement chain Lowe's rose 10.4 per cent as it joined bigger rival Home Depot in beating profit estimates.

Adding to the upbeat sentiment, Bank of America chief executive Brian Moynihan played down fears of a potential US recession and said strong consumer spending could keep the economy growing.

In other stocks Toll Brothers slipped 3.4 per cent after the luxury homebuilder posted a decline in orders, hinting at weaker demand for new homes. – Additional reporting: Reuters