European stocks were set to break a four-session losing streak on Monday, buoyed by the commodities sector after upbeat manufacturing data from China and a continued rally in oil prices.
Banks also helped to lift the trading mood, rising on hopes of higher interest rates after hawkish comments from central bankers last week.
The Stoxx Europe 600 index SXXP, +0.69% climbed 0.7% to 381.98, setting it on track to close in positive territory for the first time in five sessions. The index on Friday finished at a more-than two-month low and ended the quarter down 0.5%.
Commodity rally: Shares of miners and oil giants were posting some of the biggest gains in Monday’s action. The mining companies advanced after a private gauge of China’s factory activity rebounded in June to show an expansion, indicating an improvement in the country’s manufacturing sector. China is a major user of natural resources, so any growth indications from there tend to boost the mining sector.
Oil-related companies also got a boost from a continued rally in oil prices, with crude CLQ7, +0.13% set for an eight straight day of advances. Shares of Subsea 7 SA SUBC, +2.49% climbed 2.7%, Tullow Oil PLC TLW, +1.73% gained 2.3% and Saipem SpA SPM, +2.54% put on 2.7%.
French oil major Total SA FP, +1.78% TOT, -0.54% added 1.7% after saying it will sign a deal to invest $1 billion in a giant Iranian gas field. The agreement marks the first investment in years by a Western company in Iran’s oil sector.
Bank rally: Banks moved broadly higher, as last week’s comments from European Central Bank President Mario Draghi and Bank of England Gov. Mark Carney lingered. Both struck a surprisingly hawkish tone, raising expectations of higher interest rates, which tend to help profits in the banking sector.
Other stock movers: Shares of Nets AS NETS, +10.89% jumped 11% after the Danish digital-payments company confirmed it has been approached by potential buyers. The company said it’s reviewing its options, but that there can be “no certainty” about the outcome.
PMI updates: The euro EURUSD, -0.3588% bought $1.1386, compared with $1.1427 late Friday in New York. The shared currency stayed lower even after the final eurozone manufacturing purchasing index came in at 74-month high at 57.4, up from the flash estimate of 57.3 and higher than the 57.0 printed in May.
Germany’s manufacturing PMI rose to a 59.6 in June from 59.5 in May, also revised up from its 59.3 preliminary reading. In France, the manufacturing index posted 54.8, down from its 55.0 flash reading.
In the U.K., the manufacturing PMI slid to a three-month low of 54.3 in June, down from 56.3 in May. Economists had expected a reading of 56.0, according to FactSet.
The pound GBPUSD, -0.4377% moved lower after the data, fetching $1.2976, compared with $1.3024 late Friday in New York.