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European Equity Benchmarks Close Higher for Fifth-Straight Session, Buoyed by Bank, Auto Stocks

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Last updated: 11/07/2019 13:00:33

01:00 PM EST, 11/07/2019 (MT Newswires) -- The broad-based major European indices continued their recent rally and closed higher in Thursday trading for the fifth-straight trading session, buoyed by rising bank and automotive stocks.

In economic news, euro area productivity declined marginally in October, and the seasonally adjusted Eurozone Productivity PMI indicated only a fractional deterioration in workforce efficiency as it rose to 49.9 from 49.6 in September, which is its highest level since mid-2018, according to IHS Markit.

France topped the other European countries as labor market efficiency improved at the strongest pace in more than a year, while Germany posted the slowest fall since September 2018, and the rate of reduction in Italy matching the previous month.

Among the three largest eurozone economies, Germany remained the weakest regarding productivity, although the October contraction was the slowest in over a year due to a minor improvement in workforce efficiency in manufacturing, which ended a 19-month period of deterioration. In the service economy, IHS Markit said productivity fell at the fastest pace in one-and-a-half years and services activity rose only modestly in October.

Meanwhile Eurozone construction activity increased for the second straight month to 50.7 in October from 50.5 in September, according to the IHS Markit Eurozone Construction PMI, and at its fastest pace in four months, which was spurred by a return to growth of new orders. The rate of input cost inflation eased to a three-year low, and business confidence for output for the coming year weakened to the lowest since September 2016.

At the sector level, the increased activity was driven by a return to growth of residential construction, while commercial building activity was unchanged from the previous month, and civil engineering firms recorded a third consecutive monthly decline in output. And the rate of contraction in civil engineering activity was the sharpest in five months.

"The rate of activity growth quickened and was the fastest since June, as a quicker rise in Germany offset slower expansions in France and Italy," said Amritpal Virdee, an economist at IHS Markit. "Of the three monitored sub-sectors, housing was the only category to observe an increase in activity during October. Commercial building was unchanged from September, while civil engineering output declined for the third straight month.

In Germany, production in industry was down 0.6% in September from the previous month on a price, seasonally and calendar adjusted basis, according to provisional data from the Federal Statistical Office. Production in industry excluding energy and construction was down 1.3%, while the production of intermediate goods decreased 1.3%, and the production of capital goods dropped 1.5%. The production of consumer goods decreased 0.5%, and energy production was up 2% while production in construction increased 1.8%.

In the UK, house prices in October were 0.9% higher than during the year-ago month. On a monthly basis, house prices fell 0.1%, and in Q3 house prices were 0.2% higher than in the previous quarter.

"While this is the lowest growth seen in 2019, it again extends the largely flat trend which has taken hold over recent months," said Russell Galley, managing director, Halifax. "A number of underlying factors such as mortgage affordability and wage growth continue to support prices, however there is evidence of consumers erring on the side of caution.

Galley added that "we remain unchanged from our view that activity levels and price growth will remain subdued while the UK navigates political and economic uncertainty."

In France, the business managers in industry surveyed in October have increased their investment by 4% in nominal terms in 2019, according to the Institute for Statistics and Economic Studies. For 2020, the business leaders in industry expect their investment spending to decline by 1%.

And in Italy, the monthly growth rate of sales rose 0.7% in value terms and 0.8% in volume terms in September, after two consecutive monthly declines, according to the Italian National Institute of Statistics. In Q3 the value of retail trade grew 0.5%, while the quantity sold increased 0.4% compared with Q2.

In equities, RSA Insurance Group and home builder Persimmon helped nudge the FTSE into positive territory, rising 4% and 3.8%, followed by health care company NMC Health, mining company Evraz, and packaging company Smurfit Kappa, which climbed 2.7%, 2.6%, and 2.5% respectively. Publishing company Informa was up 2.3%, while insurance firm Admiral Group closed 2.2% higher.

In Frankfurt, airline Lufthansa led the DAX higher, moving up 6.2%, followed by industrial group Siemens, and semiconductor company Infineon, which climbed 4.9% and 4.2% respectively. Athletic shoes, clothing and accessories company Adidas and adhesives manufacturer Covestro rose 3.1% and 2.7% respectively, while automakers Volkswagen and Daimler were up 2.6% and 2.2%.

And in Paris banks helped lift the CAC higher as Credit Agricole, BNP Paribas, and Societe Generale rose 3.4%, 3%, and 2.9% respectively. Steel and mining company ArcelorMittal led all gainers climbing 6.7%, while facilities management services provider Sodexo increased 5.9%. AXA and automaker Renault were up 2.8% each, while IT firm Atos closed 2.5% higher.

The FTSE increased 0.13%, the DAX rose 0.83%, and the CAC-40 gained 0.41%.

Price: 27.96, Change: +0.15, Percent Change: +0.53

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