European Shares Lifted by Banking and Airline Gains

By Pranav Kashyap and Lisa Pauline Mattackal

(Reuters) – Gains in banking stocks and airlines lifted European shares on Tuesday, although trading remained cautious ahead of key economic data later this week.

The travel and leisure and banking sectors were the top gainers for the day, rising 0.7% and 0.9% respectively. The pan-European STOXX 600 index edged 0.2% higher to 518.88 points.

Banco Santander (BME:SAN) rose 2.5% after the Spanish bank launched a 1.525 billion euro ($1.70 billion) share buyback programme.

Meanwhile, the travel sector surged as Ryanair upgraded its summer air fare outlook. Ryanair rose 4.6%, while easyJet (LON:EZJ) and Wizz Air gained 6.9% and 5.2%, respectively.

Germany’s benchmark DAX rose 0.4%, despite detailed GDP data released earlier in the day showing Europe’s biggest economy shrank by 0.1% in the second quarter of 2024.

Further data is anticipated throughout the week from the region’s major economies, including Friday’s European Union inflation print and inflation data from the U.S.

Investors are looking for more signals on the economic health of the euro zone, as well as indications on the policy path for both the European Central Bank and Federal Reserve ahead of rate decisions in September.

“While the U.S. has the potential to go into recession, Europe continues to barely avoid one – and is thus in a more susceptible situation,” said Thierry Wizman, Global FX & Rates Strategist at Macquarie.

“That sense of foreboding will keep the stock market sensitive (to the downside) to periodic negative growth surprises, such as we had in late July.”

ECB policymaker Klaas Knot stated the euro zone central bank could gradually lower interest rates if inflation continues to fall but requires more data before confirming a September cut.

AI-sector darling Nvidia (NASDAQ:NVDA)’s second-quarter results on Wednesday are expected to be a key trigger for global equities, as even a slight miss could hurt the chipmaker’s shares.

Europe’s tech sector reversed early losses, closing 0.2% higher.

Among regional bourses, Spanish stocks rose 0.6% to their highest since early June, following Banco Santander’s rise.

Among individual movers, Bunzl (OTC:BZLFY) surged 8%, making it the biggest gainer on the STOXX 600 after the British business supplies distributor raised its annual adjusted operating profit forecast.

Spain’s Talgo fell by as much as 10% on Tuesday after the government blocked a 619 million-euro takeover bid for the train maker from the Hungarian consortium Ganz-Mavag, citing national security concerns.

(Note: $1 = 0.8957 euros)