Europe open: Mild bounce for stocks after PBoC pushes back on yuan weakness
Stocks across the Continent were staging a modest bounce on Thursday after moves from China's central bank that some traders said showed that it was pushing back on weakness in the country's currency, the yuan.
"Nonetheless, while Asia markets were able to finish higher and markets here in Europe are building on yesterday’s gains there remains little prospect of a swift resolution to the current impasse between the US and China, as the People’s Bank of China fixed the yuan above the 7.00 level for the first time since 2008," said Michael Hewson, CMC Makets's chief market analyst.
"This means that for this rebound to gain further momentum we would need to see evidence of a softening of the rhetoric around trade, and a willingness on the part of both parties to dial back their current positions."
As of 1000 BST, the benchmark Stoxx 600 was adding 0.73% to 371.26, alongside a 0.60% rise for the German Dax to 11,719.95 while the FTSE Mibtel was adding 0.62% to 20,665.91.
Gains on the Milan bourse came despite a report in Corriere della Sera that deputy Prime Minister, Matteo Salvini, had threatened to topple the government unless the PM replaced various cabinet members, including finance minister Giovanni Tria, who was seen as an obstacle to Salvini's spending proposals.
In parallel, front month Brent crude oil futures were bouncing back by 2.3% to $57.56 a barrel on the ICE, recovering nearly half of the prior session's fall in the process.
Overnight, the People's Bank of China set the daily fixing for the yuan against the US dollar at 7.0039 which was stronger than the 7.0156 that market participants had been anticipating, albeit weaker than the day before and above 7.0 for the first time since 2008.
Stronger than expected readings on Chinese export and import data for July were also boosting sentiment, with the figures revealing a shift in Chinese exports to countries other than the US, including in Europe.
The latest economic data out in the Eurozone meanwhile was a tad mixed.
Spain's national statistics office, INE, reported a 0.2% month-on-month dip in industrial output with production estimated at up by 1.8% year-on-year (consensus: 0.8%).
Versus the previous month, output of durable consumer goods and capital equipment was strongest.
In France, the central bank's manufacturing confidence index slipped from a reading of 95.5 for June (consensus: 96.0) to 95.0 in July.
Banque de France also forecast that the euro area's second largest economy would grow at a quarter-on-quarter clip of 0.3% over the three months ending in September.
Steelmaker Thyssenkrupp was in the headlines after the company cuts its forecast for adjusted full-year earnings before interest and taxes from a range of €1.1-1.2bn to €800.0m and opened the door to selling multiple units and hence breaking up its conglomerate structure.
Also out of Germany, Siemens Healthineers announced a takeover offer for American surgical firm, Corindus Vascular Robotics, for $1.1bn.