U.K. banks mixed after BOE stress test
European stocks headed higher for the first time in three sessions on Tuesday, lifted by oil majors after Royal Dutch Shell -- an industry bellwether -- provided an upbeat outlook, seen as demonstrating the worst of the oil-price slump is behind the sector.
U.K. banks were also in focus after the Bank of England said all seven major British banks passed its stress tests.
What markets are doing: The Stoxx Europe 600 index gained 0.3% to 386.03, rebounding from its lowest close since Nov. 17, logged on Monday.
The major country-specific indexes were also in a good mood. Germany's DAX 30 index climbed 0.3% to 13,034.64, while France's CAC 40 index added 0.4% to 5,381.28. The U.K.'s FTSE 100 index put on 0.4% to 7,410.89.
The euro fell to $1.1893 from $1.1900 late Monday in New York, while the pound slipped to $1.3304 from $1.3319 on Monday.
What is driving the markets: The oil sector helped lift European markets, with the Stoxx Europe 600 Oil & Gas index up 0.8%. The gain came after Royal Dutch Shell (RDSB.LN) (RDSB.LN) said it will be canceling its scrip-dividend program (http://www.marketwatch.com/story/shell-plans-25-bln-buyback-to-ax-scrip-dividend-2017-11-28) -- dividends paid in shares in lieu of cash payments -- from the fourth quarter of 2017. It also plans to buy back $25 billion worth of shares between 2017 and 2020.
Shell raised its outlook for annual organic free cash-flow to between $25 billion and $30 billion by 2020. Shares climbed 2.7%, making it one of the biggest gainers in the Stoxx 600.
Traders were also looking ahead to Jerome Powell's confirmation hearing (http://www.marketwatch.com/story/meet-the-next-fed-boss-same-as-the-old-boss-jerome-powell-to-face-senate-glare-2017-11-26) as the new Federal Reserve chairman at Capitol Hill later on Tuesday where he is taking questions from the Senate.
Read:European 'FANG' stocks? They exist, but here's why you shouldn't buy them (http://www.marketwatch.com/story/european-fang-stocks-they-exist-but-heres-why-you-shouldnt-buy-them-2017-11-27)
BOE stress tests: In the U.K., banks were in focus after the BOE said Britain's biggest banks can handle a "disorderly" Brexit. Its stress tests also found the lenders could withstand a severe recession with a collapse in housing prices, doubling of unemployment and a plunge in the pound.
The BOE concluded that none of the U.K.'s big banks need to raise extra cash to boost their capital buffers, making it the first time since 2014 that all seven major lenders have cleared the health check (https://www.wsj.com/articles/u-k-s-biggest-banks-could-handle-a-disorderly-brexit-1511854256).
The U.K. banking sector, however, traded mixed after the results were out. Barclays PLC (BCS) (BCS) fell 1.1%, and Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) slipped 1.5%. Royal Bank of Scotland Group PLC (RBS.LN) (RBS.LN) dropped 0.3%, and Standard Chartered PLC (STAN.LN) was flat.
HSBC Holdings PLC (HSBA.LN) (HSBA.LN) climbed 0.9%. Nationwide and Santander UK, which are not listed on the FTSE 100 were also stress tested.
What are strategists saying: "The Bank of England's scenario -- which included a 33% drop in house prices, the doubling of unemployment, 4% interest rates and a 4.7% plunge in UK GDP -- would see the nation's lenders lose GBP50 billion in capital but, crucially, come out the other side. Just 10 years ago that figure would have wiped the sector out, showing the progress that's been made since the financial crisis," said Connor Campbell, financial analyst at Spreadex, in a note.
Stock movers: Shares of Ocado Group PLC (OCDO.LN) surged 19% after Casino Guichard-Perrachon SA (CO.FR) said it has signed a deal with Ocado to develop an online shopping platform in France (http://www.marketwatch.com/story/casino-signs-deal-with-ocado-for-online-selling-2017-11-28). Casino shares were up 2.2% in Paris.
Siemens Gamesa Renewable Energy SA (SGRE.MC) jumped 5.8% after Sweden's state-owned Vattenfall signed a deal (http://www.marketwatch.com/story/vattenfall-picks-siemens-gamesa-to-supply-turbines-2017-11-28)for the wind turbine maker to supply turbines for three new offshore wind farms in Denmark.
Shares in Siemens Gamesa rival Vestas Wind Systems AS (VWS.KO) rallied 6.7%.
Read:This green-energy stock is getting whacked by tax-reform fears -- here's how to play it (http://www.marketwatch.com/story/this-green-energy-stock-is-getting-whacked-by-tax-reform-fears-heres-how-to-play-it-2017-11-20)
Shares of Unilever PLC (ULVR.LN) (ULVR.LN) added 1.5% after the consumer-goods giant backed its 2017 guidance.
(END) Dow Jones Newswires
November 28, 2017 05:37 ET (10:37 GMT)