Europe Markets: European stocks look for 2nd straight win despite choppy trade

European stocks rose Tuesday, aided by gains for airline easyJet PLC and car maker Volkswagen AG, but the direction of trade has been choppy as investors weigh the possibility of a new election in Germany alongside a new round of corporate earnings reports.

What markets are doing: The Stoxx Europe 600 SXXP, +0.31% , which has been darting between small gains and losses, was recently 0.3% higher at 387.37, with only the consumer services and telecom sectors losing ground. The regional benchmark on Monday tacked on 0.7% and logged its highest close since Nov. 10, according to FactSet data.

In Frankfurt, the DAX 30 index DAX, +0.61% turned up 0.5% to 13,125.76. The index on Monday reversed losses and closed up 0.5%. France’s CAC 40 PX1, +0.45% reversed course and rose 0.5% to 5,366.04, and Spain’s IBEX 35 IBEX, +0.21%   gained 0.4% to 10,061.50.

The U.K.’s FTSE 100 UKX, +0.22% was up 0.2% at 7,406.25.

The euro EURUSD, -0.1023%  bought $1.1735, not far from $1.1733 late Monday in New York. Against the pound, the euro EURGBP, -0.0677% traded hands at £0.8869 versus £0.8866 on Monday.

What’s moving markets: Prospects of a snap election were heightened after German Chancellor Angela Merkel late Monday said she would prefer voters go back to ballot boxes over running a minority government. This comes after the breakdown in negotiations to form a “Jamaica” governing coalition of parties over the weekend.

Read: Eurozone faces uncertainty after coalition talks collapse

But broadly lower moves for the euro against its major rivals appeared to aid shares of European exporters, as a stronger value for the shared currency can make their products more expensive for overseas clients to purchase.

What strategists are saying: “Early dips have been bought in European equities, as investors take their cue from the recovery in U.S. stocks last night. Yesterday there was a brief panic in German equities as the prospect of a second election loomed, but today Merkel’s apparent preference for this option has not elicited much of a reaction, even if it seems like an odd move given that a broadly similar result is likely,” said IG chief market analyst Chris Beauchamp in a note.

Stock movers: Aggreko PLC shares AGK, -9.02%  slid 10% after the supplier of generators and chillers said quarterly revenue at its power solutions utility division fell 11%, stemming from its business in Argentina. The company did maintained its full-year guidance.

EasyJet EZJ, +6.73% bounced up 6.6% after the low-cost airline said passenger traffic rose 10% in fiscal 2017 and that forward bookings for the first quarter of 2018 are ahead of last year. Net profit for the full year fell 24% to £325 million ($430 million). The stock was on track for its biggest daily gain in four years.

Volkswagen VOW3, +3.51%  leapt 4.3%, trading near the top of the Stoxx 600 and adding to Monday’s rise of 4.2% after the car maker raised its mid-term sales and profit forecast.

Babcock International Group PLC BAB, -3.11%  dropped 6%, with the defense contractor saying a U.K. government review may delay the introduction of large programs to upgrade some land-based military equipment.

Economic data: The U.K. government borrowed more in October than it did a year ago as price growth pushed up the cost of servicing inflation-linked debt, according to the Office for National Statistics. Britain’s borrowing increased by £500 million to £8 billion. The figures arrived before the U.K. government presents its budget on Wednesday.

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