STOXX 600 closes higher with focus on interest rate cuts, US data
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Continental up after upbeat Q3 comments
Focus on U.S. inflation data, earnings
Banks underperform, led by ING
STOXX 600 up 0.6%
Updated at 1606 GMT
By Paolo Laudani, Sruthi Shankar and Johann M Cherian
Oct 9 (Reuters) -European stocks settledhigher on Wednesday, bouncing from losses in the previous session as investors focussed on upcoming interest rate cuts and akey U.S. inflation report laterthis week.
The continent-wide STOXX 600 index .STOXX was up 0.6%, with the automobiles and parts sector .SXAP, which has lagged for most of the year, among top gainers with a 1.1% jump.
Continental CONG.DE gained7.2% after the German automotive supplier forecast profitability in its automotive business to improve in the third quarter.
Germany's DAX index .GDAXI outperformed the STOXX with a 1% jump.
On the flipside, banks .SX7E underperformed as Dutch lender ING INGA.AS dropped 2.5% after Deutsche Bank downgraded the stock to "hold", calling 2024 a peak for capital returns and share buybacks.
The benchmark STOXX 600 touched a two-week low on Tuesday, with China-exposed mining and luxury sectors taking a beating as investors were disappointed by a lack of fresh stimulus steps from Beijing.
All eyes will be on a news conference by China's finance ministry on Saturday for new details on fiscal stimulus.
Other major catalysts this week include the minutes of the Federal Reserve's last meeting, U.S. consumer prices data and U.S. bank earnings.
The Fed cut rates by a large 50 basis points last month. Investors expect two more rate cuts of 25 bps each this year.
Meanwhile, many EuropeanCentral Bank policymakersargued their case for another interest rate cut next week.
Money market pricing suggests traders have almost fully priced in a 25 bps rate cut by the ECB next week, and see a 94% chance of another such move in December.
Against a backdrop of a stagnating economy, cooling price pressures and a softening labour market, the STOXX index along with equities in major regional markets are on track for gains this year.
"Europe is trading at a discount relative to the U.S. and even though (economic) growth is less than what you would want, corporate profitability is still holding up in aggregate terms," said Richard Flax, chief investment officer at Moneyfarm.
"You're going to see interest rate cuts and then an acceleration in European growth over the next 12 to 18 months."
Focus will be on third quarter earnings next week, with data compiled by LSEG forecasting a 4.6% increase from a year ago.
Struggling German battery maker Varta VAR1.DE jumped about 81% after it said Porsche AG P911_p.DE would invest in its business unit for large-format lithium-ion cells.
Gerresheimer GXIG.DE jumped 4% afteractivist investor Ricky Chad Sandler bought a 5.43% stake in the German medical packaging maker.
Reporting by Paolo Laudani in Gdansk, Sruthi Shankar and Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Chris Reese
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