UPDATE 1-European shares gain as U.S.-China trade talks trigger relief
Stocks sensitive to developments in the trade war, such as carmakers, industrials, and mining companies, led the gains. Bank shares also rallied after China announced the trade talks would be held on Jan. 7-8.
"We're not expecting a major breakthrough on Jan. 7-8; that said, where equity markets are in terms of valuations ... there’s room for markets to be positively surprised," said Edward Park, deputy chief investment officer at Brooks Macdonald.
"With price-to-earnings of 14 on the S&P 500 and 11 in Europe and emerging markets, a lot of bad news is priced in."
Europe's STOXX 600 rose 1.3 percent. Germany's DAX jumped 1.7 percent and the leading euro zone index gained 1.4 percent.
Oil services TGS Nopec, Subsea 7, Aker BP , Saipem, and TechnipFMC climbed 4.8 to 5.2 percent, making them the top STOXX gainers.
Outside trade-related moves, Bayer shares climbed 4.1 percent to top the DAX. A ruling by a U.S. judge could restrict evidence favouring the plaintiffs in lawsuits alleging Bayer's glyphosate-based weed killer causes cancer.
ProsiebenSat 1 shares fell 5.9 percent after Morgan Stanley cut its price target on the stock, in a negative note on European TV highlighting rising competitive pressure from subscription video on demand platforms.
Analysts at the U.S. banks said they saw the greatest downside at ProsiebenSat1 and Mediaset. ITV was the only stock where they saw upside. They highlighted increased costs from a requirement to invest to bolster competitiveness.
Mediaset and ITV shares were down 1.4 percent.
As the fourth-quarter results season approached, analysts remained pessimistic about European earnings. They have cut earnings forecasts continuously since September 2018.
Brooks Macdonald's Park said he is slightly overweight on equities, expecting an economic slowdown but not a contraction.
"If we're going to see moderate growth in 2019 but nothing too exciting, are market participants willing to be outside risk assets for that entire time?"
(Reporting by Helen Reid; editing by Josephine Mason, Larry King)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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