Hopes for a thaw in U.S.-Chinese relations nudged European stocks higher early Friday, with trade-sensitive industrials and luxury goods groups leading the way and distracting attention from weak manufacturing surveys and disappointing banking results.
At 05:00 AM ET (10.00 GMT), the Euro Stoxx 50 index was up 0.04% at 3160.75
Shares in automakers Daimler (DE:DAIGn), BMW (DE:BMWG), Volkswagen (DE:VOWG_p), Ferrari (MI:RACE) and Fiat Chrysler (MI:FCHA) were all higher after U.S. President Donald Trump hinted at a summit meeting with his Chinese counterpart Xi Jinping in February to reach a deal that would end the threat of fresh U.S. tariffs on Chinese imports.
Europe’s automakers have been caught badly in the middle of that trade war, since a large part of their sales in China come from their plants in the U.S. and are vulnerable to Chinese countermeasures.
Luxury goods makers Kering (PA:PRTP) and LVMH (PA:LVMH), which had suffered in recent weeks amid signs of a Chinese economic slowdown, were also among the Euro Stoxx 50 leaders, while smaller rivals Salvatore Ferragamo (MI:SFER), Moncler (MI:MONC) and Burberry (LON:BRBY) also gained.
The moves suggest that trade news counts for more than another set of weak manufacturing surveys. Markit’s flash Purchasing Manager Index readings for January, released Friday, showed contraction in China, Germany and Italy. The U.K. PMI also slowed more than forecast, although it stayed above the 50 level that indicates growth.
Elsewhere, it was Groundhog Day for European banks. Deutsche Bank (DE:DBKGn) continued its slide for a third day after disappointing again, with a net loss for the fourth quarter after a 23% slump in revenue at its core bond and currency trading business. Caixabank (MC:CABK) and Sabadell (MC:SABE), two of Spain’s largest banks, also fell more than 5% after missing fourth-quarter estimates, although BBVA (MC:BBVA) rose: the sale of its Chilean business and a solid performance in Mexico helped to offset weakness in crisis-hit Turkey. Danske Bank (CO:DANSKE), which was hit last year by a money-laundering scandal, edged up 0.8% as its fourth-quarter report passed without any new shocks.