European stocks little changed as DAX erases annual decline

Bloomberg

European shares were little changed, with Germany’s DAX Index erasing its annual drop, as investors assessed recent gains in light of the outlook for earnings and economic growth.
Rebounding automakers posted the best performance of the Stoxx Europe 600 Index’s 19 industry groups. Volkswagen AG’s 1.4 percent advance buoyed the DAX, which entered a bull market last week, to a 0.1 percent gain for 2016. BP Plc led oil stocks higher as crude extended its advance above $45 a barrel amid speculation that producers will revive talks to stabilize prices. Glencore Plc dragged commodity producers lower.
The Stoxx 600 climbed 0.1 percent to 346.31 at 4:30 p.m. in London, after earlier rising as much as 0.4 percent. The volume of shares trading hands today was about 62 percent lower than the 30-day average, with some markets, including Italy’s, closed for a holiday.
“I haven’t seen any evidence of profit growth picking up — it’s about the chase of yield ultimately,” said Michael Hewson, a market analyst at CMC Markets in London. “Now that the Bank of England has joined the European Central Bank in pushing rates lower, stocks will become that much more attractive, whether or not you think they’re overvalued.”
As central banks keep monetary policy accommodative to spur economic growth, bond yields have fallen and in some countries, including Germany, are now below zero. In comparison, the dividend yield for Stoxx 600 companies is about 3.6 percent.
Investors have also been watching economic figures for indications of the region’s health. Recent data have topped projections, with reports last week showing euro-area gross domestic product grew 0.3 percent in the second quarter, as forecast, while Germany’s economy expanded 0.4 percent, twice as fast as estimated.