By Peter Nurse
Investing.com - European stock markets traded largely higher Tuesday, with the exception of the U.K. market playing catch up after Monday’s holiday, helped by signs of economic recovery in China and ahead of key local data.
At 3:40 AM ET (0740 GMT), the DAX in Germany traded 1.4% higher, the CAC 40 in France rose 0.9%, while the U.K.'s FTSE index was down 0.2%.
Helping the tone Tuesday was the news that China's factory activity expanded at the fastest pace in nearly a decade in August, suggesting that the world's second-biggest economy, and a major export market for Europe’s companies, could be seeing a durable recovery from the Covid-inspired downturn.
The Caixin/Markit Manufacturing Purchasing Managers' Index rose to 53.1 last month from July's 52.8, marking the sector's fourth consecutive month of growth and the fastest rate of expansion since January 2011.
The focus will now turn to European economic data, with markets awaiting local manufacturing and inflation readings for August. Both data sets are expected to show a slight decline from the prior month, less impressive than the Chinese numbers, as areas within Europe had to reinstate social distancing measures due to local outbreaks of the Covid-19 virus.
That said, reports indicate the German government will upwardly revise their estimates of the economy, which initially called for a 6.3% contraction in 2020.
In corporate news, Old Mutual (LON:OMU) stock fell 6.2% after the Anglo-South African insurer reported a net loss for the first half of the year and suspended its dividend payout due to the pandemic.
Telecom Italia (MI:TLIT) rose 1.2% after endorsing a government plan to create a single ultrafast network, while agreeing to sell a minority stake in its last-mile grid to U.S. investment firm KKR.
Lagardere (PA:LAGA) dropped 0.7% amid a potential legal battle with its two largest shareholders, French media conglomerate Vivendi (PA:VIV) and activist fund Amber Capital, over boardroom representation.
Oil prices pushed higher Tuesday, helped by weakness in the U.S. dollar which makes commodities priced in the greenback more attractive to overseas buyers.
The dollar hit its lowest in more than two years earlier Tuesday as investors continue to digest the previous week’s policy shift on inflation announced by the U.S. Federal Reserve.
Later Tuesday, investors will look to the American Petroleum Institute’s figures on U.S. oil supply, with inventories expected to continue to be reduced.
U.S. crude futures traded 1.4% higher at $43.22 a barrel, while the international benchmark Brent contract rose 1.1% to $45.77.
Elsewhere, gold futures rose 1% to $1,998.95/oz, while EUR/USD traded 0.4% higher at 1.1989.