Europe close: Stocks end up amid Sino-US trade hopes; industrial data misses forecasts
European stocks ended in the green on Wednesday amid hopes of an extension to the Sino-US trade truce, although there was some bad news on the macro front as eurozone industrial production figures disappointed.
The benchmark Stoxx Europe 600 index closed up 0.6% at 364.97, while Germany's DAX and France's CAC 40 finished 0.4% higher at 11,167.22 and 5,074.27, respectively.
The positive mood came after US President Trump said he could extend the 1 March deadline to reach a trade deal with China if the two sides are making good progress.
Spreadex analyst Connor Campbell said: "With the ongoing negotiations in Beijing paving the way for Thursday’s top tier tete-a-tete between Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer on one side, and Vice Premier Liu He on the other, the pressure may have been taken off oh so slightly following some interesting comments from Donald Trump overnight.
"Still yet to sign the shutdown-avoiding deal agreed on by Democrats and Republicans - the announcement of which was the other major market-booster on Tuesday - the President claimed that if the US and China were close to a ‘real deal’ then he could let plans to immediately hike tariffs on March 1st ‘slide for a little while’."
On the corporate front, Dutch brewer Heineken fizzed higher as its full-year earnings beat expectations, with revenue and margin ahead of consensus, while Dulux owner Akzo Nobel also gained on the back of solid fourth-quarter numbers.
Shares in Europe's largest asset manager, Amundi, were on the rise after it confirmed its profit targets for 2020 and lifted its earnings per share for 2018.
Elsewhere, French corporate and investment bank Natixis pushed higher even as it said fourth-quarter profit fell as it booked a €260m loss on Asian derivatives.
Speciality chemicals company Clariant was in the red as it posted a drop in fourth-quarter sales and operating profit.
Dutch bank ABN Amro was also weaker as its fourth-quarter net profit undershot analysts' expectations.
In macroeconomic news, the latest figures from Eurostat showed that industrial production in the eurozone was worse than expected in December.
Production fell 0.9% on the month, coming in much weaker than the 0.4% decline analysts were expecting. On the year, meanwhile, industrial production dropped 4.2%, which was also worse than the 3.2% fall pencilled in.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the data was "very weak" but the details are mixed and the crash in Ireland was the primary driver.
"Production rose in France and Germany, but the aggregate euzone number was pulled lower by a 13.2% crash in Ireland - thanks mainly to declining output in the pharma and electronic equipment sectors - and weakness in Italy and Spain. Production also declined sharply in the Netherlands, by 3.2%, but edged higher in Portugal and Austria. Across sectors, weakness in production of capital goods remained a drag as did energy output, but production durable consumer goods rebounded further, indicating that the auto sector is revving up again, slightly. Production of intermediate goods was flat, while non-durable goods output fell by 1.5%."
Andrew Kenningham, chief Europe economist at Capital Economics, said "the downturn will serve to keep worries about a possible euro-zone recession alive".
"For now we suspect that the industrial sector will perform a little better at the start of this year, in line with the manufacturing PMI. And other parts of the economy should do better than industry. However, the risk of an outright recession has clearly risen," he said.