© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 22, 2022. REUTERS/Staff
By Sruthi Shankar
(Reuters) -European stocks were pinned near three-month highs on Wednesday as data showed a downturn in euro zone business activity eased slightly in November, while rallying commodity shares offset losses in Credit Suisse following its profit warning.
The Europe-wide index inched up 0.1% to its strongest level since Aug. 19. Oil and gas and mining stocks extended gains for a second session, and were up 1.3% each.
Credit Suisse fell 5.1% to the bottom of STOXX 600 after the embattled Swiss lender said it expects to make a pre tax loss of up to 1.5 billion Swiss francs ($1.58 billion) for the fourth quarter.
S&P Global (NYSE:)’s flash Composite Purchasing Managers’ Index (PMI) for the euro zone, seen as a good gauge of overall economic health, nudged up to 47.8 in November from the previous month. Economists were expecting a fall to 47.0 in a Reuters poll.
The survey, however, also showed overall demand continued to decline as consumers cut spending amid a cost of living crisis.
“The PMIs confirm that the European economy is probably already in a technical recession in the fourth quarter but they also show we’re stabilising around the low levels and not falling off a cliff,” said Christian Stocker, lead equity strategist at Unicredit (BIT:).
“It is a light recession but nothing dramatic for the earnings.”
The benchmark STOXX 600 has rallied about 14% from its September closing lows, aided by a better-than-expected earnings season and expectations that Federal Reserve will slow its pace of rate hikes amid signs of a cooling U.S. economy.
The Fed’s November meeting minutes, due at 1900 GMT, will offer fresh clues on the path of interest rates. Traders have currently priced in a 77% chance that the U.S. central bank will hike rates by 50 basis points in December.
The European Central Bank will release its own meeting minutes on Thursday. ECB Vice-President Luis de Guindos said the central bank will keep raising interest rates until it brings inflation down to around its 2% mid-term goal.
Kering (EPA:) slipped 0.8% in choppy trading after a report said Gucci’s creative director Alessandro Michele is leaving the Italian fashion house, owned by the French luxury group.
EMS Chemie dropped 3.8% after the Swiss nylon maker cut full-year earnings forecast amid worsening economic outlook.