UKX FTSE 100 Index

By Carla Mozee, MarketWatch

Tobacco stocks rise on ratings call

European stocks on Wednesday bounced off a nearly three-week low, staging a recovery as traders came to terms with the further deterioration in the trade relationship between the U.S. and China that sent equities worldwide tumbling in the prior session.

How markets are performing

The Stoxx Europe 600 Index rose 0.6% to 385.61, on course to wipe out Tuesday's drop of 0.7% (European%20stocks%20finish%20at%203-week%20low%20as%20U.S.-China%20trade%20tensions%20escalate) that marked its lowest close since May 31. All sectors rose on Wednesday, led by the basic materials group that led decliners on Tuesday.

Germany's DAX 30 index climbed 0.5% to 12,734.41, following Tuesday's retreat of 1.2%. France's CAC 40 index rose 0.2% to 5,401.04.

Italy's FTSE MIB index charged up 0.8% to 22,260.22, and Spain's IBEX 35 declined 0.9% at 9,845.80.

The U.K.'s FTSE 100 was up 1.1% at 7,684.52.

The euro traded slightly lower at $1.1573, from $1.1589 late Tuesday in New York.

What's driving markets

A measure of calm was returning to equity markets, even though the U.S. and China were still locking horns on trade issues. The Shenzhen index added 1.2% in Asian trade after Tuesday's 5.8% slide, and the Shanghai Composite was up a more modest 0.3%. Hong Kong's Hang Seng Index gained 0.9%.

The Trump administration accused China of waging a systematic campaign of "economic aggression" in a report released Tuesday (http://www.marketwatch.com/story/navarro-report-blasts-china-for-systematic-economic-aggression-2018-06-19), and that followed U.S. President Donald Trump's indication that he wants his administration to hit China with further tariffs on $200 billion in imported goods. Trump was responding to Beijing's threat to retaliate against U.S. tariffs with its own levies on another batch of U.S. products (http://www.marketwatch.com/story/china-threatens-further-tariffs-on-us-products-as-trade-conflict-escalates-2018-06-19).

Read:China can't match Trump in a tariff fight, but it does have other weapons (http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)

Also:Escalating U.S.-China trade spat comes at a bad time for global growth, economist says (http://www.marketwatch.com/story/escalating-us-china-trade-spat-comes-at-a-bad-time-for-global-growth-economist-says-2018-06-15)

"The markets have been trading on the same piece of general trade war news for a while, as a result selling exhaustion has started to set in," leading Asian stocks to rise and European equities to open higher, said Jasper Lawler, head of research at London Capital Group, in a note.

"Any fresh news of retaliation could see traders snatch risk back off the table quickly," he said.

Investors are also watching developments from the Organization of the Petroleum Exporting Countries, whose members are gathering in Vienna (http://www.marketwatch.com/story/what-time-is-the-opec-meeting-2018-06-19). While meetings are set for Friday and Saturday, OPEC Secretary General Mohammad Barkindo on Wednesday delivered his opening speech for the group's International Seminar, and oil ministers have started making comments on the sidelines. Oil prices were up nearly 1%, above $65 a barrel.

See:What time is the OPEC meeting? (http://www.marketwatch.com/story/what-time-is-the-opec-meeting-2018-06-19)

And read:Why Goldman Sachs still sees oil peaking above $82 a barrel this summer (http://www.marketwatch.com/story/why-goldman-sachs-still-sees-oil-peaking-above-82-a-barrel-this-summer-2018-06-18)

Meanwhile, British lawmakers in the House of Commons are expected to continue their debate of the bill that will take the U.K. out of the European Union. On Monday, the U.K. House of Lords voted to give Commons members a "meaningful vote" on the final Brexit deal, a result that's considered a defeat for the U.K. government led by Prime Minister Theresa May.

Stock movers

Imperial Brands PLC (IMBBY) rose 2.9%, and British American Tobacco PLC (BATS.LN) gained 2.7%, with Liberum starting coverage on the tobacco producers with buy ratings.

Berkeley Group Holdings PLC (BKG.LN) dropped 4.1% after the U.K. home builder said it expects profit to be around 30% lower in fiscal 2019 (http://www.marketwatch.com/story/berkeley-group-foresees-lower-profit-2018-06-20) and that pretax profit in fiscal 2018 represented a peak.

Etablissementen Franz Colruyt NV (COLR.BT) shares jumped 10% following the Belgian retailer earnings report.

(END) Dow Jones Newswires

June 20, 2018 05:04 ET (09:04 GMT)

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