European stocks advanced Tuesday, with technology shares in recovery mode after a selloff in the previous session that pushed the market to its worst close in nearly a month.
The Stoxx Europe 600 SXXP, +0.57% was up 0.5% at 388.70, with only the telecom sector in the red. Technology and consumer services shares were rising the most.
The pan-European index on Monday dropped 1%, its largest percentage decline since May 17, largely dragged down by a drop in tech shares. That sector suffered in the wake of an abrupt decline on Wall Street for tech shares on Friday.
On Tuesday, the Stoxx 600 Technology Index FX8, -3.61% gained 1.3%, but still had a way to go to recoup Monday’s loss of 3.6%.
“Having been such a one-way bet so far this year, this sudden turn to the downside [in tech stocks] will have caught out more than a few over-eager latecomers. However, those rushing to proclaim the demise of one of the big rallies of not only the past year but the past eight years too need to be careful,” said Chris Beauchamp, chief market analyst at IG, in a late Monday note.
“[T]here will be plenty of dip buyers out there who have been waiting for a pullback of this kind of size,” he said.
Individual techs: In the tech group, Apple Inc. AAPL, -2.39% supplier Dialog Semiconductor DLG, +3.42% picked up 3.4%, French payments technology provider Ingenico Group ING, +1.54% added 2.3% and Swiss financial services software maker Temenos Group AG TEMN, +1.80% put on 1.9%.
Stock movers: Capita PLC shares CPI, +13.53% leapt 13% after the provider of outsourcing services said it expects profitability to improve in the second half of the year. It also said trading since the start of the year is in line with its expectations.
Luxottica LUX, +2.85% gained 2.7% after Morgan Stanley raised its rating on the eyewear maker to overweight from equal-weight. There should be “no material hurdles” in regulatory approval for a planned merger between Luxottica and Essilor International SA EI, +1.84% , said Morgan Stanley. Essilor shares were up 2%.
Royal Bank of Scotland PLC shares RBS, +2.04% rose 2.5% after Sky News reported the lender is near at multibillion-pound settlement with the U.S. Federal Housing Finance Agency over misselling of toxic mortgage bonds.
Deutsche Lufthansa AG shares LHA, +3.39% climbed 2.1%. Credit Suisse raised its rating on the German air carrier to neutral from underperform, according to Dow Jones Newswires.
Merlin Entertainments PLC MERL, -2.61% shares fell 2.2% after the theme park and resort operator said recent terror attacks have reduced domestic demand. However, trading since the beginning of the year is in line with expectations, it said.
Economic data: Consumer prices rose in May at the fastest annual rate since June 2013, new data show. Inflation in the U.K. was at 2.9% in May, said the Office for National Statistics, exceeding forecasts for an annual rate of 2.7%. The Bank of England has said it expects inflation to peak just below 3%.