European stock markets post gains in choppy session

European stock markets posted a second day of consecutive gains on Wednesday as investors continued to bargain hunt in the heavyweight resources sector, whilst European banks were broadly positive, apart from the volatile French banks whose credit rating was downgraded in a widely expected move by Moody’s.

The FTSE 100 rose 1% on the day, whilst the DAX and CAC outperformed broader European trade, rallying 3.3% and 1.9% on the day.

It’s been another very busy day of trading for investors, who have had to digest multiple news stories including echoes of rhetoric from European financial figures, company earnings, moves by credit ratings agencies and weaker US economic data, which has all had to be digested on the back of high trader sensitivity. The result has been a very choppy trading session, with stocks boosted by investors bargain hunting in some of the badly beaten down stock sectors as opposed to reacting to a change in trader sentiment.

Earlier talk from EU Commission President Jose Manual Barroso that he will soon present options for the introduction of euro bonds had helped to lift stocks at the start of the session.

Investors, who have shown tendencies to react to any shadow of news, rumour or speculation, started to lock in their days early gains after data out of the US showed that retail sales failed to rise in August, when a meagre rise of 0.2% had been earlier predicted, adding to the weight of concern over a slowdown in US activity at a time when consumer sentiment is at a two-and-a-half-year low.

A subsequent delay in the vote on changes to the European Financial Stability Facility also sent investors into profit taking mode, and this forced European Index gains back towards flat territory on the day before traders found a second wind and this helped to support stock prices into the close.

Next earnings help shares to top FTSE
Shares in Next leapt 8% on Wednesday to post a new 2011 high after shareholders were enthused to see the company raise its full-year profit guidance and announce an 8% increase in half year profits before tax. The sentiment within the earnings has been very positive and justifies why Next shares have broadly outperformed the FTSE 100 at a time when most shares are losing value and consumer spending is facing serious headwinds.