'Investors have faith that Germany will find a way to move past its current uncertainty,' strategist says
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European stocks closed higher Tuesday, aided by gains for airline easyJet PLC and car maker Volkswagen AG, as investors appeared to set aside concerns about the possibility of a new election in Germany.
Equity markets in the region rose as major U.S. stock gauges rallied (http://www.marketwatch.com/story/nasdaq-shapes-up-for-another-record-with-retail-earnings-on-deck-2017-11-21), with a leap in technology shares pushing the Nasdaq Composite Index to an all-time high.
What markets are doing: The Stoxx Europe 600 rose 0.4% to end at 388.10, building on Monday's gain of 0.7% (http://www.marketwatch.com/story/european-stocks-stage-recovery-in-wake-of-german-political-uncertainty-2017-11-20). The regional benchmark logged its highest close since Nov. 9, or nearly two weeks ago.
In Frankfurt, the DAX 30 index finished 0.8% higher at 13,167.54, while France's CAC 40 picked up 0.5% to 5,366.15.
The U.K.'s FTSE 100 was up 0.3% to close at 7,411.34.
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The euro bought $1.1741, up slightly from $1.1733 late Monday in New York.
What's moving markets: The prospect of a snap election in Germany was heightened after Chancellor Angela Merkel late Monday said she would prefer voters go back to the ballot box (http://www.marketwatch.com/story/germanys-merkel-would-prefer-new-election-over-minority-government-2017-11-20) over a minority government. Over the weekend, negotiations between her political party and two others to form a "Jamaica" coalition government broke down (http://www.marketwatch.com/story/the-euro-still-can-break-higher-analysts-react-to-germanys-political-uncertainty-2017-11-20).
But broadly lower moves for the euro against its major rivals appeared to aid shares of European exporters, as a stronger value for the shared currency can make their products more expensive for overseas clients to purchase.
What strategists are saying: "Despite plenty for investors to be down about--including, but not limited to, the political instability in Germany, what could be a damp squib [U.K.] Autumn Budget tomorrow and, well, Brexit--the markets burst into life this Tuesday afternoon," said Connor Campbell, financial analyst at Spreadex, in a note.
"It seems investors have faith that Germany will find a way to move past its current uncertainty without the kind of performance-damaging aftermath seen by some of its peers (looking at you, Spain and the U.K.)," he added.
Stock movers: EasyJet (EZJ.LN) shares bounced up 5.1%. The move came after the low-cost airline said passenger traffic rose 10% in fiscal 2017 (http://www.marketwatch.com/story/easyjet-net-profit-down-24-passenger-traffic-up-2017-11-21), but that net profit fell 24%.
Aggreko PLC shares (AGK.LN) slid 11%. The supplier of generators and chillers said quarterly revenue at its power solutions utility division fell 11%, stemming from its business in Argentina. The company maintained its full-year guidance.
Shares of Volkswagen (VOW.XE) leapt 3%. The gain added to Monday's rise of 4.2%, logged after the car maker raised its midterm forecast for sales and profit.
Babcock International Group PLC (BAB.LN) dropped 6.8%. The defense contractor said a U.K. government review may delay the introduction of large programs to upgrade some land-based military equipment.
Economic data: The U.K. government borrowed more in October than it did a year ago (http://www.marketwatch.com/story/uk-public-borrowing-increases-in-october-2017-11-21) as price growth pushed up the cost of servicing inflation-linked debt, according to the Office for National Statistics. Britain's borrowing increased by GBP500 million to GBP8 billion.
The figures arrived before the U.K. government presents its budget on Wednesday, expected to be presented by Chancellor Philip Hammond at around 12:30 p.m. London time, or 7:30 a.m. Eastern Time.
(END) Dow Jones Newswires
November 21, 2017 12:15 ET (17:15 GMT)