EUROPE MARKETS: European Stocks Gain Ground As Euro Drifts Lower

By Carla Mozee, MarketWatch

European stocks pushed higher Tuesday, with shares in exporters rising as the euro pulled lower, as investors' hopes grew for a U.S. interest rate hike in September.

The Stoxx Europe 600 index was up 0.6% to 345.08, gaining traction after listless action at the open. All sectors were higher except for the basic materials group. The index on Monday shed 0.2% (http://www.marketwatch.com/story/european-stocks-slump-as-yellens-rate-hike-message-sinks-in-2016-08-29).

The German and French indexes were outperforming the pan-European benchmark on Tuesday. Frankfurt's DAX 30 index was up 1% to 10,649.30, while the CAC 40 index in Paris rose 1% to 4,468.98.

Among individual stocks on those indexes, German auto maker Volkswagen AG (VOW.XE) (VOW.XE) was up 1.6% and French car maker Peugeot SA (UG.FR) tacked on 1.8%.

At the same time, the euro fell against the U.S. dollar, at $1.1168 from $1.1186 late Monday. European exporters such as auto makers tend to benefit when the euro drifts lower, as it makes their products less expensive to buy for holders of other currencies.

The greenback has advanced since Federal Reserve Chairwoman Janet Yellen said last week that the case for a U.S. rate hike has strengthened, said Nawaz Ali, currency strategist at Western Union Business Solutions, in a note.

"However, if U.S. nonfarm payrolls data this Friday shows a third consecutive month of robust jobs growth, then I would expect a good portion of traders to re-think their dovish bets that the Fed will not hike interest rates from 0.5% to 0.75% on September 21," Ali added.

On Tuesday, investors will be watching for comments from Federal Reserve Vice Chairman Stanley Fischer when he appears on Bloomberg TV between 6.30 and 7 a.m. Eastern Time, to see whether he continues the hawkish tone taken by Fed Chairwoman Janet Yellen.

The European Central Bank will make its own policy announcement on Thursday next week. Ahead of that, "there's been more narrative" about the prospect of the ECB extending its corporate-bond purchasing program, said Tony Cross, market analyst at Trustnet Direct.

"That could be driving sentiment," Cross said.

Movers: Associated British Foods PLC (ABF.LN) , which runs sugar operations and the retailer Primark, was upgraded to outperform from sector perform at RBC. Shares were up 2.3%.

Other indexes: Italy's FTSE MIB picked up 1.3% to 16,875.88. Bank shares on the index were gaining, including at 2.7% rise in UniCredit SpA (UCG.MI). Spain's IBEX 35 gained 0.6% to 8,669.40.

   In London, the FTSE 100   was up 0.1% at 6,845.44. 

Data: A final reading of minus 8.5 of European consumer confidence in August from the European Commission met market expectations.

(END) Dow Jones Newswires

August 30, 2016 05:54 ET (09:54 GMT)

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