Travel, automakers lift European stocks despite growth worries

(Reuters) -European stocks edged higher on Thursday supported by travel companies and automakers, while doubts over monetary policy outlook and signs of slowing global growth limited gains across the board.

The pan-European STOXX 600 index was up 0.2% after Asian shares slid as concerns grew over the Chinese economy after a run of soft data. [MKTS/GLOB]

Travel and leisure stocks rose 1% to lead sectoral gains as they recovered from a recent sell-off on concerns about the Delta variant of the coronavirus, while automakers gained 0.8%.

Economy-sensitive industrial goods & services, chemical and construction and materials sectors, which were all trading near record highs, rose about 0.5%.

“We find value stocks quite exciting, a lot of the stocks are quite cheap,” said Aaron Barnfather, European equities portfolio manager at Lazard Asset Management.

“But we are quite concerned that expensive stocks … are very vulnerable to any shift in the environment, particularly if we were to see bond yields start to rise.”

The European stocks benchmark is trading just a few points below its all-time highs, with investors holding off on big bets ahead of the U.S. jobs data on Friday that could influence the Federal Reserve’s thinking over policy tightening.

The European Central Bank is set to meet next week, with some of the hawkish members recently calling out the bank to pare back its pandemic-era bond purchases.

While strong earnings and a relatively high rate of vaccination have supported European economic recovery, investors are wary that tighter monetary conditions and slowing growth could drive choppiness in markets through the rest of the year.

Among individual stocks, Swedish Orphan Biovitrum soared 24.5% after U.S. venture capital firm Advent International and Aurora Investment offered to buy the drugmaker in a deal valued about 69.4 billion Swedish crowns ($8 billion).

Miner BHP Group fell 6.1% on ex-dividend trading, weighing on the UK’s blue-chip FTSE 100. [.L]

CMC Markets fell 27.6% after the online trading platform cut its annual earnings outlook by up to 80 million pounds ($110.24 million), as reduced market volatility resulted in lower transaction volumes across new and existing clients.

British engineering firm Melrose Industries gained 5.3% as it reported a first-half profit.