Carmakers drive recovery

Shares in the automakers helped European and US stocks push higher, with investors also reacting yesterday to political developments in eurozone big-hitters Germany and Italy. Investors in London meanwhile eyed a key British budget announcement heading into Brexit, while Asian stock markets fluctuated with traders remaining on edge after last week’s global equities rout.

“European equities are rallying broadly in afternoon action, with the auto sector leading the way following a report suggesting China will cut its tax on car purchases by 50pc, while Italian stocks are rallying amid relief as Standard & Poor’s (S&P) held off on downgrading the nation’s credit rating, even as it cut its outlook,” analysts at Charles Schwab wrote in a note to clients.

Milan’s FTSE Mib was up 2.4pc in afternoon trading. “The markets are shrugging off flared-up political uncertainty in Germany after Chancellor Angela Merkel announced she will not seek re-election of her party’s chair and signaled that this may be her last term as Chancellor,” they added.

Merkel announced yesterday she will step down as German chancellor at the end of her term, after voters again punished her fragile coalition in a regional poll. Frankfurt’s DAX 30 index was 2.0pc higher. “Today is a tale of the two chancellors, with Angela Merkel’s decision to step down as the leader of the CDU grabbing the headlines ahead of Philip Hammond’s pre-Brexit budget,” said Joshua Mahony, market analyst at IG trading group.

London’s FTSE 100 index was up 1.9pc ahead of the 1530 GMT unveiling of the budget that could nevertheless be scuppered by Brexit next year.