European stocks rally for fifth day as defensives, miners climb

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, August 12, 2022. REUTERS/Staff
  • Miners lifted by bumper results from BHP
  • Sonova plunges after cutting FY forecast
  • German investor morale dips in August

Aug 16 (Reuters) - European shares extended gains for a fifth straight session on Tuesday, buoyed by defensive sectors and miners, although concerns over a potential recession limited further upside.

The continent-wide STOXX 600 index (.STOXX) inched up 0.2%, hitting a fresh 10-week high after recouping much of its June losses this week.

Miners (.SXPP) jumped 3.2% to lead gains, lifted by a 5.5% surge in London-listed global miner BHP Group after stellar results. read more

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Telecoms (.SXKP) and utilities (.SX6P) - sectors seen as safer bets during economic uncertainty - also advanced.

"A lot of this (rally) is running on technicals and momentum, but the fundamentals haven't changed," said Seema Shah, chief strategist at Principal Global Investors.

"The economic outlook for Europe is very negative. As we start to see recession come through and some of the hard economic data begins to deteriorate, that's when you could see European equities deteriorate."

German investor sentiment fell slightly in August on concerns the rising cost of living will hit private consumption, and suggesting Europe's largest economy is tipping into recession. read more

"The ZEW survey fell again in August and is at a level consistent with the economy contracting," said Andrew Kenningham, chief Europe economist at Capital Economics.

"We now think a recession is unavoidable in the second half of this year as the impact of high energy prices on both households and industry takes effect."

Separate data showed euro zone countries swung into a trade deficit in June from a surplus 12 months earlier because of soaring prices of imported gas and oil. read more

European stocks have held near recent peaks this week, despite weak data out of China and the United States as well as concerns around gas supply disruptions in Germany.

Russia's Gazprom has cut gas flows to Germany through the Nord Stream 1 pipeline to 20% of capacity, driving fears of a severe shortage in the winter season.

Among other stocks, Delivery Hero (DHER.DE) climbed 5.4% after the German online takeaway food company forecast a 7% growth on the quarter in its third-quarter gross merchandise value (GMV). read more

Sonova (SOON.S) plunged 16% after the hearing aid maker lowered its full-year earnings forecast, citing a slower-than-expected development in some important markets and higher component and freight costs.

Pandora (PNDORA.CO) fell 6.1% after the Danish jewellery maker reported disappointing second-quarter sales in the U.S. market. read more

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Reporting by Sruthi Shankar and Anisha Sircar in Bengaluru; Editing by Sriraj Kalluvila and Emelia Sithole-Matarise

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