Cyclical Stocks Lead Europe Higher (MarketWatch) (08-01-2008)

LONDON (MarketWatch) - European moved higher in early trade on Tuesday in a broad rally, rebounding from recent losses on hope of U.S. interest rate cuts and bought back into cyclical stocks such as miners and auto makers.

The pan-European Dow Jones Stoxx 600 index rose 0.4% to 352.82, with copper miner Kazakhmys, up 3.3%, and auto maker PSA Peugeot-Citroen, up 2.3%, among standouts.

PSA Peugeot-Citroen said that its worldwide sales of built-up cars and light vans rose by 3.8% last year compared with 2006 to 3.23 million vehicles and that it expects growth of about 5% in 2008, which helped the French CAC-40 index move higher by 0.8% at 5,498.19.

The U.K. FTSE 100 index rose 0.6% at 6,375.00 and the German DAX 30 index climbed 0.7% at 7,871.43 and

In the U.K. there was some encouraging news as the Halifax monthly survey of the U.K. housing market an increase in house prices by 1.3% in December after three successive monthly falls. Economists had been expecting a 0.2% fall.

On the other hand, the British Retail Consortium reported that monthly sales growth in December was the weakest since March 2006. Shares in U.K. retailers have dropped sharply over the last week after profit warnings from DSG International, Next and others.

Meanwhile, budget airline easyJet saw its shares fall 5.9%; it said that its load factor - a measure of passengers to available seats - for December fell to 78.9%, from 81.2% at the same point last year. Passenger traffic rose 9.9% to 2.9 million.

On the plus side of the airline sector, shares in Europe's biggest airline, Air France-KLM, advanced 1.7% after the firm said that the number of passengers it carried in December rose 0.5% to 5.8 million, driven by growth in all regions except Europe.

Recruitment consultancy Michael Page International was another standout, up 10.1%. The firm said that its fourth quarter gross profit rose 37.6% to 128.2 million pounds after a record year in 2007.

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