European shares helped by trade talk hopes; miners, autos up

MILAN: European shares rose on Wednesday on gains in trade-sensitive materials and auto stocks, though disappointing updates from staffing firm Adecco and home improvement retailer Kingfisher weighed.

The STOXX 600 rose as much as 0.3 percent to two-week highs with sentiment buoyed by hopes that the United States and China will return to the negotiating table after the latest tariff round.

The pan-European benchmark index however pared some gains and by 0841 GMT was up 0.1 percent.

Washington and Beijing both announced fresh tariffs on reciprocal imports this week, though the measures were less severe than initially expected, bolstering hopes of a deal.

"Our base-case scenario sees both parties negotiating a settlement in the next 6-9 months," Credit Suisse strategists said in their daily note.

Caution however remained with some investors still wary that U.S. President Donald Trump could seek to extend tariffs to all Chinese imports.

Earlier on Wednesday, Chinese Premier Li Keqiang said his country would not engage in competitive currency devaluation and will not weaken the yuan to boost exports.

Basic materials were the biggest sectoral gainer, up 1.4 percent, after copper prices rose sharply as investors shrugged off the risks of an escalation of the U.S.-China trade row.

Heavyweight miners Glencore and BHP rose 1.8 and 1.5 percent respectively.

Financials also provides support, although Danske Bank  fell 5.8 percent following the resignation of its CEO and an updated on a money laundering probe that prompted the bank to cut its full-year outlook.

Elsewhere earning updates drove share price moves.

Adecco fell 4 percent after the world's largest staffing firm said it has seen a slowdown in growth so far in the third quarter. Its fall weighed on Dutch peer Randstad.

RBC Capital said the slowdown was bad news but added that the stock's valuation was cheap and that the company's end markets remained relatively robust.

Kingfisher reported a 15 percent fall in half-year profits, sending its shares down 5 percent.

A solid update however lifted German automotive parts maker Schaeffler up 3.2 percent. The company kept its guidance for overall sales this year thanks to stronger orders at its industrial division.

Its gains helped, the autos sector, which has been penalised this year by growing trade concerns rise 0.8 percent.