* Trade-sensitive DAX gains as investors return from holiday
* Basic resources, auto stocks top gainers on STOXX
* Madrid's bank-heavy stock index the only laggard
(Updates to close)
By Sruthi Shankar
June 11 (Reuters) - European stocks finished higher for a third
day on Tuesday, as German shares caught up with a global stock rally
after a holiday on easing trade tensions, while fresh stimulus for
China's slowing economy boosted the basic resources sector.
The pan-European STOXX 600 index closed at its highest level
since May 17, with miners , auto stocks
and chemical companies tacking on biggest gains after reports
that Beijing was opening the door to more spending by local
Also buoying sentiment was U.S. President Donald Trump's decision
last week to hold off on imposing import tariffs on Mexico which
sparked a relief rally across markets on Monday.
Trading after Whit Monday holiday, Germany's trade-sensitive DAX
rose 0.9%, helped by gains in car makers BMW
, Daimler and Volkswagen AS .
Shares in industrial conglomerate ThyssenKrupp , which generates
about $1 billion euros in Mexico, jumped 4.8% to the top of the DAX index.
"The Bank of China came out with some measures for stimulus
and therefore some of the more cyclical stocks are bouncing off
oversold levels," said Will James, senior investment director for
European equities at Aberdeen Standard Investments.
"All these stocks had a challenging May and one of the
reasons for the markets' delayed reaction is quite a lot of markets in
Europe were closed yesterday."
European stocks have climbed over 4% from their early June lows on
positive trade headlines and the prospect of interest rate cuts by the
U.S. Federal Reserve.
Worries about the impact of tensions between the United States and
China on the pace of growth in the world's major economies sent
European stocks down about 6% in May, their worst month in more than
Investors are now betting that the U.S. central bank will ease
monetary policy to counter any global slowdown from the trade wars
between the world's major economies.
Trump said on Monday he was ready to impose another round of
punitive tariffs on Chinese imports if he cannot make progress in
trade talks with Chinese President Xi Jinping at the G20 summit.
"The prospect of potential loosening of policy to avert a
further scaledown of the global economy, that's the reason why there
has been a bit of a sentiment shift in European markets," James added.
Madrid's bank-heavy IBEX was a laggard, after Morgan Stanley
lowered its earnings estimates for Spanish banks for 2020 and 2021,
factoring in a flatter yield curve as a result of the European Central
Bank's swing towards taking new steps to reduce interest rates.
Helping Copenhagen-listed shares up 2.5%, Novo Nordisk rose
5.2% as data on cardiovascular outcomes from competitor Eli Lilly's
diabetes drug was seen as underwhelming.
Hugo Boss rose 4.3% after shares of the German fashion house
were upgraded to "equal-weight" from "underweight"
by Morgan Stanley for the luxury retailer's strategic plan to
reposition the brand under two labels.
Limiting gains on London's FTSE midcap index , fashion retailer
Ted Baker tumbled 29% after it issued a lower annual profit
forecast, citing an "extremely difficult" start to 2019.
STOXX 600 performance since early June
(Additional reporting by Amy Caren Daniel and Agamoni Ghosh in
Bengaluru; graphics by Helen Reid in London; editing by Patrick Graham
and Ed Osmond)
((Amy.CarenDaniel@thomsonreuters.com ; within U.S. +1-646-223-8780;
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