Europe close: Stocks jump on earnings optimism, weakness in single currency

Stocks found their footing late in the session, boosted by a retreat in the single currency and optimism from some analysts concerning the outlook for corporate earnings on both sides of the Atlantic.

Stable readings on two key economic surveys out of the Eurozone also propped up sentiment.

To take note of, investors were carefully monitoring government bond and commodity markets following the sharp moves seen at the end of the prior week, which had weighed on stocks.

Despite that, on Monday JP Morgan's Mislav Matejka told clients he expected the rebound in shares to extend even as bond yields moved back higher, with Cyclicals expected to lead shares higher.

"As the worst of the FX headwind might be happening right now for Eurozone, the relative revenue beats should start shifting toward the region in 2H. We believe the reporting season will be taken well as equities derated in Q1 and beats are rewarded, not faded," he said.

At the closing bell, the benchmark Stoxx 600 was higher by 0.35% or 1.34 points to 383.18, alongside a gain of 0.25% or 31.89 points for the German Dax to 12,572.39, while the FTSE Mibtel was ahead by 0.64% or 153.18 points to 23,982.52.

In parallel, the yield on the benchmark 10-year German bund was gaining five basis points to 0.64%, while that on similarly-dated US Treasuries had come within a whisker of 3.0% earlier in the session.

From a sector standpoint, Banks, Technology and Oil&Gas were all higher on the Stoxx 600.

Meanwhile, euro/dollar was down by 0.63% at 122113.

Matejka and his team were anticipating euro area earnings per share would grow by 14% year-on-year during the first quarter, versus the analyst consensus for growth of 9%.

In the background, at the weekend US Treasury Secretary Steve Mnuchin opened the door to a visit to China as part of the ongoing trade talks between the two countries, indicating he was "cautiously optimistic" of being able to reach a deal.

Meanwhile, according to perhaps the most closely-followed survey of conditions in the bloc's factory and services sectors, IHS Markit's manufacturing and services sector purchasing managers' index, the slowdown in euro area economic growth appeared to stop in April.

IHS Markit's 'composite' PMI, which combines readings for both sectors, was unchanged in April versus the month before, printing at 55.2, although that had been the slowest pace since the beginning of 2017.

"Growth has downshifted markedly since the peak at the start of the year, but importantly still remains robust," IHS Markit's Chris Williamson said.

Nevertheless, ahead of the ECB's policy decision on the following Thursday, some analysts said they were more interested in the price gauges contained in the report, which in this instance showed input costs rising by the least since seven months.

Meanwhile, in corporate news, shares of German retailer Metro plunged - sending its shares to the bottom of the leaderboard on the Stoxx 600 - on the heels of profit warning on 20 April that prompted analysts at Bernstein to muse aloud about the need for a change of the guard at the helm of the firm.

German healthcare group Fresenius SE pulled out of its $4.3bn bid to acquire US generic cancer drugs maker Akorn after detecting "material breaches" of FDA standards.