European stocks higher on banking deals, PMIs

The pan-European Stoxx 600 index was up 0.3%, with most sectors and major bourses in positive territory

European stocks were higher Monday as investors assessed banking deals and German and French business activity data.

The pan-European Stoxx 600 index was up 0.3% at around 1:30?pm GMT, with most sectors and major bourses in positive territory.

Shares of Commerzbank cut losses to 0.6% from 5% after Italy’s UniCredit announced it had increased its stake in the German lender to nearly 21% and submitted a request to boost the holding to up to 29.9%.

UniCredit believes that there is substantial value that can be unlocked within Commerzbank, either stand-alone or within UniCredit, for the benefit of Germany and the bank’s wider stakeholders. However, as was the case for UniCredit, such potential requires action for it to be crystalized, the bank said on Monday.

The Stoxx 600 had traded lower earlier in the day after French preliminary composite PMI data, a measure of business activity in the manufacturing and services sector, declined in September.

It came in at 47.4, an eight-month low and down from 53.1 in August, according to HCOB data.

German business activity also declined in September, with the HCOB flash composite PMI tumbling from 48.4 in August to 47.2 in September, a seven-month low.

“A technical recession seems to be baked in” to Germany’s GDP outlook, as per Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

Our GDP nowcast for the current quarter, which considers the HCOB purchasing mangers’ index among other indicators, now points to a 0.2% decline compared to the quarter before. In the second quarter GDP already declined at a rate of 0.1%. There is still some hope that the fourth quarter will be better as higher wages along with lower inflation should boost not only real income but also consumption, supporting domestic demand, he added.