(C) Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt
By Shreyashi Sanyal
(Reuters) – European stocks eked out gains by the closing bell on Monday after automakers resumed their rally, while banks fell after a slump in Turkey’s currency and worries lingered about more restrictions due to rising coronavirus cases on the continent.
The pan-European STOXX 600 rose 0.2%, reversing declines from earlier in the session, with automobile stocks rising for a fifth day in the past six sessions.
Porsche jumped 8.9% on contagion from a buying frenzy that has been lifting Volkswagen (DE:VOWG_p) shares after the German car maker unveiled plans to challenge Tesla (NASDAQ:TSLA) in the e-car market.
Deutsche Bank (DE:DBKGn) raised its target prices on Porsche, which holds the majority of Volkswagen ordinary shares, following a target rise for VW.
“Volkswagen is doing a good job on cost cuts which, together with a re-acceleration of the cycle and visibility on electric vehicles, make current valuations interesting in the medium to long term,” said Michele Pedroni, fund manager at Decalia.
“A possible spin-off, especially of Porsche, could only generate additional value,” he added.
The Turkish lira plunged to a near record low after President Tayyip Erdogan replaced a hawkish central bank governor with a critic of high interest rates over the weekend.
However, the mood had improved by the end of the day.
“Thankfully the situation is not yet comparable with 2018, when the European Central Bank even warned about the potential risk to those banks which had exposure to the country and the danger that Turkey’s woes could lead to ripple effects throughout the financial system,” said Russ Mould, investment director at AJ Bell.
“Europe’s lenders have cut their loan books to Turkey since 2018 and HSBC has even contemplated withdrawing altogether.”
European stocks had seen sharp falls on Friday, easing from a one-year peak as renewed lockdowns in France and concerns over the pace of vaccination drives hit sentiment, with the European Union threatening to block exports of COVID-19 vaccines to Britain.
A British minister warned on Monday that Britons should wait before booking summer holidays abroad, pointing to rising COVID-19 infection rates in Europe.
The wider travel & leisure sector fell 0.7%, with Germany set to extend a lockdown to contain the COVID-19 pandemic into its fifth month.
European shares edge higher as autos lead gains, Turkey-exposed banks fall
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.