Paper stocks, auto shares drive European shares higher
London: European shares bounced off six-months lows on Tuesday as the focus shifted from politics to dealmaking and earnings, with paper and packaging stocks soaring after Smurfit Kappa rejected a bid approach.
Telecom Italia (TLIT.MI) jumped 5 percent after Bloomberg reported that activist investor Elliott Management was building a stake, in a move to challenge the way top shareholder Vivendi (VIV.PA) is managing the company.
The pan-European STOXX 600 index was up 0.6 percent in early deals, while Italy's benchmark .FTMIB recouped all of its losses from the previous session, up 1 percent, as concerns over political uncertainty following an inconclusive election result eased.
Germany's DAX .GDAXI was particularly buoyant, rising more than 1 percent, led higher by autos stocks Volkswagen (VOWG_p.DE), Daimler (DAIGn.DE) and BMW (BMWG.DE) which have been hit by concerns over an imminent trade war after U.S. President Donald Trump proposed imposing tariffs on steel and aluminum.
Those worries have dissipated slightly as Trump faces a growing pushback from political and diplomatic allies as well as U.S. companies.
European autos .SXAP were the best-performing sector on the day, up 1.4 percent and putting the industry back into positive territory for the year, along with tech stocks .SX8P.
Paper and packaging maker Smurfit Kappa (SKG.I) jumped 18 percent after rejecting an approach from International Paper (IP.N). Peers DS Smith (SMDS.L) and Mondi (MNDI.L) both rose more than 5 percent.
Earnings weighed on Just Eat (JE.L), however, which dropped more than 12 percent and was on track for its worst day on record after saying that a planned increase in spending in 2018 would hit core earnings.