Written by Pranav Kashyap
(Reuters) – European stocks rose on Wednesday, led by gains in energy and defense shares, defying declines in Asia and Wall Street after an Iranian missile attack on Israel exacerbated fears of a broader regional conflict.
The European index rose 0.3 percent to 522.37 points.
The energy sector rose 2.4% and is looking for its best session in more than five months, with oil prices rising amid fears of escalating conflict in the Middle East in the wake of Iran’s largest-ever military strike against Israel. (or)
Rising tensions also boosted defense companies including Germany’s Rheinmetall, Sweden’s Saab, BAE Systems (LON:), Leonardo, Thales and Dassault Aviation, whose shares rose between 2% and 3%.
An index of European aviation and defense stocks rose by about 1%.
Israeli Prime Minister Benjamin Netanyahu vowed that Iran would pay a price for its missile attack on Israel on Tuesday, while Tehran said any retaliation would face “widespread devastation.”
Basic resources rose 0.9% as prices rose after Chinese stimulus measures boosted demand expectations. (methyl/L)
On the data front, unemployment data in the Eurozone for August is expected to be released at 0900 GMT. Markets will also be watching comments from the ECB’s chief economist, Philip Lane, with a group of ECB Governing Council members scheduled to speak during the day, including Vice President Louis de Guindos.
European real estate stocks were highly affected by prices, and fell about 1%, the biggest pressure on the benchmark index during the day.
Meanwhile, Citigroup said it now expects the ECB to cut interest rates by 25 basis points at its meeting in October, with subsequent cuts expected in December and into early 2025.
The European Central Bank will meet in less than two weeks to decide on borrowing costs.
“The biggest market driver is the expectation that the ECB may actually move from quarterly cuts to cascading cuts,” Karim Chedid, chief investment strategist at Blackrock (NYSE:) told iShares EMEA.
He added: “As we enter a new earnings season in Europe, there may be headwinds for the cyclical parts of Europe, given that the manufacturing decline is not close to ending yet.”
Among individual stocks, JD (NASDAQ:) Sports Fashion lost 2.5% even though the British sportswear retailer beat consensus expectations for first-half earnings.
Spain’s unemployment rate rose in September by 0.12%, according to the Labor Ministry. The index was trading flat.
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