Deutsche Bank hits two-week high as European shares advance

European shares advanced on Tuesday, with Germany's Deutsche Bank hitting a two-week high following steep losses and the world's biggest education company Pearson gaining after encouraging comments by analysts at Morgan Stanley.

Stocks enjoyed their biggest gain in almost two weeks, while the UK’s FTSE 100 Index rose within reach of an all-time high.

On currency markets, sterling slid to its lowest level in more than three decades on fears of a "hard Brexit" from the European Union and its single market. Concerns about its impact dragged Wall Street lower in early trading.

Dublin

The Iseq index rose 0.55 per cent, underperforming the major European indices, as its biggest stocks had contrasting fortunes. Building materials group CRH advanced 3.6 per cent to €30.60, which cancelled out falls for a number of other companies.

Ryanair lost 2.3 per cent in Dublin after saying sustained weakness in the pound may curb demand from British travellers for destinations such as Spain. The airline, which announced it would add 10 new routes from Hamburg next summer, closed at €11.91.

Food group Kerry slipped 2.1 per cent to €73.30, while paper and packaging group Smurfit Kappa was down 0.3 per cent at €19.67.

However, insulation-maker Kingspan rose 1.5 per cent to €24.55 and bookmaker Paddy Power Betfair advanced 1.7 per cent to €103. Total Produce recovered after a poor Monday session, adding 4 per cent to close at €1.67.

London

London-listed stocks benefited from the weakness in the pound. The blue-chip FTSE 100 index, dominated by international and export-driven companies that often benefit from a weaker pound, closed up 1.3 per cent, close to the record high set in April 2015.

The FTSE 250 mid-cap index, whose companies are more exposed to the state of the domestic UK economy, also closed 0.9 per cent higher, having touched a record high earlier in the day.

Pearson rose 5.2 per cent after Morgan Stanley said the company was unlikely to issue a profit warning.

Precious metal stocks Randgold and Fresnillo both fell more than 5 per cent, leading losers on the STOXX index, as gold prices fell to their lowest since Britain’s Brexit vote in June, as a bounce in the dollar after upbeat US data triggered a break of key support at $1,300 an ounce.

Europe

The benchmark Stoxx Europe 600 index rose 0.8 per cent. Germany’s DAX, which resumed trading after a holiday on Monday, added 1 per cent, while in France, the Cac 40 advanced 1.1 per cent, helped by gains for Renault and PSA Group.

Deutsche Bank rose as much as 3.5 per cent to a two-week high. Its shares had slumped to a record low on Friday before bouncing back on expectations of a swift deal with US authorities over a multi-billion dollar penalty.

Among sector movers, BMW rose 3.3 per cent and helped the European auto and parts index to gain 2 per cent after analysts at Exane BNP Paribas raised its target price for the automaker to €87 from €70.

Among stocks active on corporate news, LVMH Moet Hennessy Louis Vuitton rose 3 per cent after it agreed to buy an 80 per cent stake in suitcase maker Rimowa.

US

Stocks on Wall Street fell on Tuesday as investors fretted about Britain's exit from the European Union and the prospect of a Federal Reserve interest rate hike in coming months. The International Monetary Fund also lowered its 2016 growth forecast for the US economy to 1.6 per cent from 2.2 per cent and painted a gloomy picture of the global economy.

Ten of the 11 major S&P 500 indexes fell, with the high dividend-paying utilities sector falling 2.26 per cent and telecom services down 2.03 per cent.

Sears surged 4.57 per cent after Bloomberg reported that the department store chain's Craftsman tool brand had attracted multiple bidders.

Apple rose 0.7 per cent and was the top influence on the three major indexes. The iPhone maker extended the global reach of Apple Pay by launching the software in Russia.

– (Additional reporting: Bloomberg / Reuters)