European stocks were set to wrap up September with the best performance since 2019, as optimism around resilient US economic growth and lower interest rates lifted risk appetite.
The Stoxx Europe 600 Index was up about 0.1% by 2:02 p.m. in London. The gauge has gained more than 1% this month, outperforming in a typically weak seasonal period.
BHP Group Ltd. shares dropped 1.5% after China’s state-run iron ore buyer told major steelmakers and traders to temporarily halt purchases of the firm’s all new cargoes.
Energy and auto stocks also fell, while financial services and personal care shares outperformed. Asos Plc dropped 7.2% as it warned full-year earnings would be at the lower end of expectations as the online fast fashion chain works on a complex turnaround plan.
Lumber stocks Stora Enso Oyj and UPM-Kymmene Oyj dipped after US President Donald Trump ordered 10% tariffs on imports of softwood timber and lumber, as well as 25% levies on kitchen cabinets, vanities and upholstered wood products.
European stocks have traded in a narrow range in the past four months as investors assessed signs of a slowing US economy against the outlook for further Federal Reserve interest-rate cuts. The blue-chip Euro Stoxx 50 is approaching its March record.
Still, some caution is setting in ahead of a looming US government shutdown that could delay the key jobs report on Friday.
Roland Kaloyan, head of European equity strategy at Societe Generale SA, said he was sticking with his year-end target of 530 points for the Stoxx 600, implying declines of over 4% from current levels.
“I don’t think the double-digit earnings growth expected for next year will materialize; that’s why I’m not buying 2026,” Kaloyan said.
Elsewhere, a UBS Group AG basket of defense stocks edged lower after Trump and Israeli Prime Minister Benjamin Netanyahu agreed on a 20-point plan designed to end the war in Gaza.
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