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European Stocks Mixed; HSBC Gains on 3Q Earnings

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By Peter Nurse

Investing.com - European stock markets traded mixed early on Monday, with investors weighing strong results from banking giant HSBC as well as China’s latest Covid-19 outbreak.

At 4:30 AM ET (0830 GMT), the DAX in Germany traded 0.2% higher, the U.K.’s FTSE 100 climbed 0.5%, at a 52-week high, while the CAC 40 in France fell 0.1% .

HSBC (LON:HSBA) stock rose 0.2% after the U.K. banking giant, one of the largest in Europe, beat expectations with a 74% rise in third quarter profit, posting pretax profit of $5.4 billion versus $3.1 billion a year earlier.

As with Wall Street's results last week, these were helped by the release of cash set aside for expected bad loans that have not materialized. HSBC also announced a share buyback of up to $2 billion, but said it wouldn't restore its dividend yet.

Staying in the banking sector, Banca Monte dei Paschi di Siena (MI:BMPS) stock fell over 5% after UniCredit (MI:CRDI), down 1.8%, and Italy's government called off negotiations over the sale of the ailing bank.

Elsewhere, Lufthansa (DE:LHAG) stock rose 0.8% after the chief executive of the German airline said Monday that business air travel is recovering faster than expected and should remain solid through the winter.

Still, worries are growing that an increase in Covid-19 cases in China, one of the globe’s main growth drivers, will hit global demand.

China warned Monday that new infections will increase in the coming days after the latest outbreak expanded to 11 provinces, prompting the locking down of Ejin, a county in northwestern Inner Mongolia that has seen the most Covid-19 cases. China is one of the few countries still adopting a 'zero tolerance' attitude toward Covid, preferring economically costly lockdowns to acceptance that the disease will become endemic.

Goldman Sachs (NYSE:GS) downgraded its prediction for China’s economic growth at the weekend, saying it will likely expand 5.2% next year, down from a previous projection of 5.6%.

Germany’s Ifo Institute released its October business climate survey earlier Monday, and the index slipped to 97.7, from a revised 98.9 the previous month. Elsewhere in Germany, Zooplus (DE:ZO1G) stock rose 0.6% after a takeover battle between two private equity houses for the pet supplies retailer ended with them making a joint bid that looks likely to be approved by its board.

Crude prices pushed higher Monday, climbing to multi-year highs with global supply remaining tight and demand strong as the economic recovery from Covid-19 continues.

By 4:30 AM ET, U.S. crude futures traded 0.9% higher at $84.47 a barrel, just off the highest level since October 2014, while the Brent contract rose 0.7% to $85.22, just off the October 2018 high.

Additionally, gold futures rose 0.3% to $1,801.05/oz, while EUR/USD traded 0.1% higher at 1.1656.

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