By Shashwat Chauhan
European shares recouped early losses to edge higher on Friday, as energy and mining stocks tracked firmer commodity prices, while German miner Aurubis slumped following a profit warning.
The pan-European STOXX 600 rose 0.3% to 459.6 points, on track to gain nearly 2% for the week, as China-exposed stocks lifted sentiment this week on signs of more stimulus measures from Beijing.
The broader mining sector gained 0.7% as most base metal prices rose after a private-sector survey showed factory activity in top consumer China surprisingly returned to expansion in August. [MET/L]
"With an improvement in domestic demand, new orders and output, investors are hoping that this could mark something of an inflection point," said Richard Hunter, head of markets at interactive investor.
Europe's largest bank HSBC, which also does business in China, rose 0.7% and lifted the STOXX 600 index.
The oil and gas sector added 1.7% as crude prices rose due to tightening supplies and expectations that the OPEC+ group of oil producers would extend output cuts to the end of the year. [O/R]
European automakers slipped 1.3% as Volkswagen AG fell 2.6% after UBS downgraded the German automaker to "sell" from "neutral".
Shares of Renault lost 3.7% after UBS cut the French automaker's rating to "sell" from "neutral" and slashed its target price by 25%.
The retail sector is poised to be the best performer this week, and was up 0.4% for the day.
Shares of Aurubis slumped 15%, reaching their lowest level in nearly 10 months, after Europe's largest copper producer said it would not reach its full-year profit outlook after identifying "considerable discrepancies" in target inventories.
Data showed France's manufacturing sector contracted for the seventh consecutive month and at a slightly sharper pace than initially forecast in August, while a separate reading showed Germany's manufacturing sector, which accounts for about a fifth of its economy, remained mired in a downturn in August.
Another survey showed the downturn in euro zone manufacturing eased last month, suggesting the worst may be over for the bloc's beleaguered factories although demand weakened to its lowest in almost a year.
Euro zone government bond yields were largely unchanged on Friday. [GVD/EUR]
Among individual stocks, Johnson Matthey jumped 12.5% to the top of the STOXX 600 after the investment arm of New York-based industrial firm Standard Industries doubled its stake in the British autocatalyst maker to 10%.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Sherry Jacob-Phillips)
