Surge in Volkswagen shares helps drive market

Optimism for further central bank stimulus sent European stocks to a three-month high, fuelled by gains in carmakers amid a weak euro.

The Stoxx Europe 600 Index rose 0.9% at the close of trading in London.

The euro trading near its weakest level since April boosted exporters, sending Volkswagen higher for a 10th day, its longest streak in five years.

The optimism was broad- based among the region’s shares, with all industry groups climbing.

“The market is in good shape, but any further upside will need some support from central banks or from a relief in commodity prices,” said Guillermo Hernandez Sampere, who helps manage about €250m as head of trading at MPPM EK in Eppstein, Germany.

“We wait for Draghi to reload the stimulus bazooka and Yellen to raise interest rates in the US, and then we will start to evaluate what will be the path for 2016.”

The European stock gauge has gained 2.3% in two days.

Speculation the ECB will add to stimulus measures and that the global economy is strong enough to withstand an increase in US borrowing costs has helped the rebound since a September low.

With US markets closed yesterday for the Thanksgiving holiday, markets were quieter than usual.

The volume of Stoxx 600 shares changing hands was about 30% lower than the 30-day average.

Europe’s stocks have regained more than half of their losses since a September low, with the Stoxx 600 closing 7.2% below the record reached in April.

While they are up in November for a second month, miners have declined as commodities reached their lowest prices since 1999.