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Aug 15, 2016

European Closing Markets on August 15, 2016, by CNBC: Wall Street Record Highs, Oil Rebound Fails to Excite Europe

Arjun Kharpal, Alexandra Gibbs, Holly Ellyatt

European markets finished roughly flat on Monday despite oil futures posting sharp gains and U.S. stocks trading at record highs, as global growth concerns took center stage.

The pan-European STOXX 600 fluctuated throughout trade, closing 0.06 percent up provisionally, as poor performance from individual sectors capped gains in the region.

Looking at individual bourses however, the U.K.'s FTSE 100 popped 0.5 percent by the close, while Germany's DAX ended up 0.3 percent. The French CAC 40 however lagged behind, closing 0.04 percent up.

Oil lifts sentiment, while Japan data misses

FTSE FTSE 6947.34 31.32 0.45% 356621369
DAX DAX 10735.57 22.14 0.21% 31207438
CAC CAC 4499.29 -0.90 -0.02% 33192328
IBEX 35 IBEX 35 Idx 8716.60 0.20 0% 49014705

A solid rebound in oil prices helped lift sentiment somewhat on Monday, as speculation over potential action by leading oil producers helped prop up prices. Brent and U.S. WTI extended gains during trade despite glut concerns continuing to weigh on sentiment, trading up some 2.5 percent at Europe's close, at $48.12 and $45.62 respectively.
In the U.S., all three major US indexes hit fresh record highs during its early hours on Monday, as investors kept an eye on oil prices and on the Federal Reserve. The Federal Open Market Committee is expected to release its minutes from its July meeting, later this week. Investors will be paying attention to the minutes to see what the central bank thinks about the economy and whether a rate hike could happen in 2016.

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Meanwhile, economic data in Asia was also in focus on Monday as Japanese shares closed lower following data which showed that the economy failed to grow in the three months through June.
Asia markets however closed mixed to mostly higher on Monday, with China markets leading the gains. This comes amid speculation of more stimulus by the People's Bank of China, following a slew of weaker-than-expected July data, according to Reuters.

H&M sales rise

In individual stock news, British security firm G4S was higher after the company announced Tim Weller as its new chief financial officer and as Deutsche Bank and Credit Suisse raised its price target for the stock. Shares of Petrofac, the company where Weller is transferring from, were sitting at the bottom of the energy sector, off more than 2 percent.
Meanwhile, Swedish retailer H&M reported a 10 percent rise in July sales sending shares of the firm over 2 percent up. This helped lift some retail stocks, including Zara-owner Inditex. Zalando was also sharply higher, after DZ Bank and RBC raised their price targets on the stock.
The STOXX 600's top performer was UCB, up over 7 percent, after the Delaware District Court confirmed the validity of the Belgian biopharmaceutical company's patent for epilepsy drug Vimpat,
Meanwhile, Sage pared most of its losses after falling close to 5 percent. This comes after the software firm said there had been "unauthorized access to customer information using an internal login".

JPMorgan backs UK stocks

In other news, Britain could leave the European Union (EU) towards the end of 2019, instead of early that year as expected by some politicians, according to a report in the Sunday Times citing sources who have been briefed by ministers that Brexit departments were not ready.
JPMorgan said that it would stick with its "overweight" recommendations for U.K. equities, because stocks in the country offer high dividend yields and the Bank of England could cut interest rates further. The central bank cut interest rates for the first time in nearly seven and a half years, from 0.5 percent to 0.25 percent, earlier this month. JPMorgan also said sterling weakness as a result of the Brexit vote in June, would also help exporters.
U.K. housebuilders were also in focus after Bovis Homes reported an 18 percent rise in first-half revenue. Shares of Bovis Homes were trading sharply down however, after JPMorgan cut its price target for the stock.
Other housebuilders including Barratt Developments and Taylor Wimpey were showing signs of weakness after JPMorgan cut their price targets.