By Sara Sjolin, MarketWatch
LONDON (MarketWatch) -- European stock markets rose Tuesday, as
investors largely shrugged off a partial shutdown of the U.S.
government and instead mirrored gains in Asia.
The Stoxx Europe 600 index added 0.3% to 311.38, partly
recovering from a 0.6% loss on Monday.
Shares of Telecom Italia SpA jumped 4.3% after Goldman Sachs
reinstated coverage of the firm with a buy rating.
"We believe the proposed changes to TI's controlling shareholder
structure may provide it an opportunity to delever its balance
sheet, which could lead to a significant positive change in
strategy," the analysts said.
Shares of Renault SA added 1.2% after data showed new French car
registrations for the auto maker jumped 18% in September.
More broadly, investors took inspiration from Asia, where
Japanese stocks ended in positive territory after Prime Minister
Shinzo Abe announced plans to increased the nation's sales tax in
efforts to help the country's public finances.
U.S. stock futures also pointed to a higher open, even as the
lawmakers failed to agree on a budget for the new fiscal year
before the deadline, prompting a partial closure of the government.
The shutdown is the first since 1996 and will leave thousands of
government workers furloughed and national parks closed. Other
services, including the issuing of Social Security checks and the
U.S. Mail, will continue.
"It is not a wise idea for the politicians to play with the
fragile recovery and especially the pace that they are playing
with, as this could easily derail the recovery," said Naeem Aslam,
chief market analyst at Ava Trade, in a note.
"The hope is that both the Democrats and the Republicans would
come to their senses soon enough to see what the consequences could
be on the markets by passing the temporary budget which could let
the government run in the [meantime]," he added.
Back in Europe, data confirmed that the euro zone's
manufacturing sector expanded for a third straight month in
September, with the purchasing managers' index coming in in line
with a preliminary estimate of 51.1, but lower than the 51.4 August
print. A reading above 50 signals expansion.
Meanwhile, Eurostat said unemployment in the currency union
edged lower for a third straight month in August, although not
enough to affect overall the unemployment rate, which held steady
at 12%. The July joblessness rate was revised lower after
previously being reported at 12.1%, which means the 12% rate was
the lowest since December 2012. Germany's unemployment unexpectedly
rose to 6.9% in September.
"We see little momentum in the labor market picture at the
aggregate level. This reflects our view that although a recovery in
the euro area is well under way, it will take time for the rebound
in sentiment to feed through to actual hiring decisions," said Timo
del Carpio, European economist at RBC Capital Markets, in a
note.
Most country-specific indexes, however, ignored the downbeat
assessment and moved higher. France's CAC 40 index rose 0.7% to
4,171.81, while Germany's DAX 30 index gained 0.5% to 8,639.53.
The U.K.'s FTSE 100 index fell 0.3% to 6,445.12. Shares of
Unilever PLC (UL) weighed on the index in London, off 3.7%, after
the consumer-products giant downgraded its sales-growth
expectations for the third quarter due to a slowdown in emerging
markets.
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