UKX FTSE 100 Index

By Mark DeCambre, MarketWatch

European stocks rose Tuesday, putting a pan-European index on the verge of booking a gain for the first time in three sessions as Turkey's currency meltdown showed signs of steadying.

What are markets doing?

The Stoxx Europe 600 rose 0.6% at 387, after shedding 0.3% on Monday (http://www.marketwatch.com/story/european-stocks-drop-as-investors-remain-focused-on-turkey-2018-08-13) to finish at 384.91 amid escalating worries about Turkey's plunging lira.

The gauge is showing a rise of 0.3% thus far this week but a 0.6% decline so far in 2018, according to FactSet data.

Germany's DAX 30 traded 0.7% higher at 12,440.47, after closing Monday's session down 0.5%, while France's CAC 40 rose 0.4% to 5,433.01, following a slide of about 0.1% in the previous session. The U.K.'s FTSE 100 , meanwhile, climbed 0.2% to 7,653.49, after a 0.3% fall for the index on Monday.

The euro traded at $1.1417, edging slightly higher from $1.1411 late Monday in New York, but stable.

What is driving the market?

European bourses turned higher early Tuesday as investors attempted to shake off worries about the deterioration of Turkey's currency, and a possible spillover effect from that decline. Traders resumed tentatively buying stocks on the back of healthy economic reports.

Meanwhile, the Turkish lira rose nearly 5% against the dollar on Tuesday (http://www.marketwatch.com/story/turkeys-lira-rallies-vs-the-dollar-on-tuesday-2018-08-14) after a withering series of drops to historic lows against the U.S. dollar. The slide has roiled global markets. The lira crisis, kicked off partly by reports by the Financial Times (paywall) (https://www.ft.com/content/51311230-9be7-11e8-9702-5946bae86e6d), that the European Central Bank was concerned about contagion from Turkey's currency slide to eurozone financial firms, took a turn for the worst after U.S. President Donald Trump on Friday said he authorized the doubling of steel and aluminum tariffs on Ankara.

One dollar bought 6.5463 lira, compared with 6.8846 late Monday in New York and one euro changed hands at 7.4645 lira , versus about 7.9079 lira in the previous session, a gain of decline of about 5.5% against the euro.

Trump's representatives on Monday told Turkey's ambassador that negotiations between the nations cannot move forward to remove sanctions against Ankara until detained evangelical pastor Andrew Brunson is released from the country.

A report on expansion (http://www.marketwatch.com/story/germanys-economy-sped-up-in-second-quarter-2018-08-14) in Germany showed that Europe's second-largest economy saw growth of 0.5% in the second quarter, with an annualized rate of 1.8%. However, the report indicated that global trade tensions and Turkey's currency crisis are clouding the business outlook.

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What are strategists saying?

"Investors are becoming increasingly worried about how the Turkish crisis would spread into other markets after yesterday's EM currencies and equities selloff. So far, I think the risk of contagion is limited and yesterday's selloff was due more to a risk-off mood than a fundamental reason," wrote Hussein Sayed, chief market strategist at FXTM, in a Tuesday research note.

"However, economies with large current account deficits such as India, Argentina and South Africa will come under increased economic pressure as the Fed continues to tighten monetary policy," he added.

Stock movers

Shares of Antofagasta PLC (ANTO.LN) fell 4.8% after the company reported quarterly results, putting the miner among the worst performer on the pan-European benchmark.

(END) Dow Jones Newswires

August 14, 2018 04:30 ET (08:30 GMT)

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