Europe close: Stocks rise as US-China trade tensions ease

(Sharecast News) - European stocks edged higher on Monday as investors regained some composure following sharp losses in the previous session, after US president Donald Trump moved to calm escalating trade tensions with China. The pan-European Stoxx 600 rose 0.39% to 566.35, rebounding from Friday's 1.3% plunge.

Germany's DAX advanced 0.55% to 24,375.28, France's CAC 40 gained 0.21% to 7,934.26, and London's FTSE 100 added 0.16% to 9,442.87.

"On Monday, London stocks saw a slight rebound, driven primarily by mining companies," said Patrick Munnelly, market strategy partner at TickMill.

"This came after US president Donald Trump adopted a more conciliatory tone regarding trade tensions with China, which had triggered a significant market selloff the previous Friday.

"The FTSE 100, representing the top blue-chip companies, showed signs of recovery."

Markets had been rattled late last week after Trump announced plans to hike tariffs and impose export restrictions on China, cancelling a scheduled meeting with Chinese president Xi Jinping in response to Beijing's new controls on rare-earth exports.

Russ Mould, investment director at AJ Bell, said: "Just as it looked as if the US and China were making baby steps to repair their relationship, Donald Trump throws a spanner in the works."

He added that "a new threat of high tariffs on Chinese goods coming into the US spooked investors in the East, with Asian markets showing a sea of red, following a similarly bad session for Wall Street last Friday."

However, sentiment improved over the weekend after Trump attempted to reassure investors, writing on social media: "Don't worry about China, it will all be fine! [Xi] doesn't want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!"

Munnelly noted that "over the weekend, Trump adopted a more diplomatic approach, assuring that 'it will all be fine' and emphasising that the US had no intention of 'hurting' China. This shift in tone brought some relief to the markets."

In currency markets, the euro slipped 0.36% to $1.1577, hovering near a two-month low as political uncertainty in France continued to weigh on the single currency.

Prime minister Sébastien Lecornu, reappointed on Friday after briefly resigning, was set to present a draft budget bill to cabinet and parliament later in the day.

No major economic data was released in Europe, but stronger-than-expected Chinese trade figures drew investor attention.

Exports grew 8.3% year on year in September, while imports rose 7.4%, both comfortably exceeding forecasts.

Big Yellow surges, Nexans falls on surprise CEO change

In equities, Big Yellow Group surged 15.44% in London after confirming that Blackstone is evaluating a possible takeover offer for the self-storage operator.

Mould observed that "Blackstone clearly has a strong appetite for UK property as it also confirmed takeover interest in self-storage group Big Yellow.

"A lot is riding on the Budget as to whether Blackstone will make a formal bid, but throwing its hat into the ring now means it can act fast should Rachel Reeves not announce anything that dampens the appeal of the sector."

Munnelly noted that "in the mergers and acquisitions space, US private equity powerhouse Blackstone revealed it was in the early stages of evaluating a potential cash offer for Big Yellow Group.

"This news sent shares of the self-storage company soaring by 18.3%, while rival Safestore also experienced a significant boost, jumping 11.2%."

Lloyds Banking Group rose 0.94% even as it disclosed plans to set aside an additional £800m to cover compensation costs linked to the UK's motor finance mis-selling scandal.

"Lloyds has increased its motor finance compensation provisions by more than two thirds," said Mould.

"The bank gives the impression it is not happy with the proposed compensation methodology, implying this is not a done and dusted situation.

"It isn't trying to wriggle out of paying compensation full stop. Instead, it appears to be pushing for a fairer redress system."

He added that "a rising share price represents two things: one, some clarity on Lloyds' potential exposure; and two, hope that Lloyds might successfully get the regulator to tweak its proposal in its favour."

Munnelly added that "the bank announced it anticipates an additional charge of £800m due to a motor finance investigation in the UK, pushing its total provision to £1.95bn.

"Despite this, analysts at ING remain optimistic, stating that Lloyds can comfortably absorb the financial impact through its earnings."

Among other gainers, Fresnillo advanced 9.09% and Endeavour Mining climbed 11.27% as higher gold and silver prices boosted sentiment across precious metal miners.

"This new-found nervousness pushed investors back into gold, putting the shine back on the precious metal and reigniting the rally in gold miners," said Mould.

"Fresnillo and Endeavour Mining topped the FTSE 100's list of risers, representing a rapid U-turn from last week's bout of profit taking."

Munnelly also highlighted that "precious metal miners emerged as standout performers, surging by 7% as gold prices reached another record high.

"Leading the charge on the FTSE 100 were Fresnillo and Endeavour, which saw impressive gains of 7.6% and 6.4%, respectively."

Semiconductor equipment maker ASML rebounded 4.78%, recovering some of the ground lost in Friday's sell-off.

On the downside, Nexans fell 9.26% after the French cable and optical fibre manufacturer announced an unexpected change in leadership, replacing its chief executive without providing a specific reason.

The company said the decision aimed to "create a new momentum to further optimise performance."

Reporting by Josh White for Sharecast.com.