European stocks start week by posting gains

Stocks across Europe rose Monday, finding a measure of calm after nervousness about China’s economy and a U.S. rate hike left equities in the red last week.

The Stoxx Europe 600 SXXP, +0.48% picked up 0.5% to 354.81, but pared bigger gains. All but the oil and gas SXEP, -0.03% sectors finished higher. Energy shares felt the pull of U.S. oil prices CLV5, -3.91% and Brent crude futures LCOV5, -3.73% which each fell by more than 3%.

Trading volume was lower than usual as the U.S. energy market was closed for the Labor Day holiday. Equity markets there were also closed.

Glencore PLC GLEN, +7.02% GLCNF, -5.03% ended near the top of the Stoxx 600. Shares jumped 7% after the miner and commodities trader said it’s undertaking measures aimed at reducing net debt by about $20 billion. The company is ditching its final dividend and plans a $2.5 billion stock sale. Read: Copper prices may get a break as Glencore suspends two mines.

But among decliners was Associated British Foods PLC ABF, -0.83% Shares shed 1.4% after the company, which owns fashion retailer Primark, said full-year earnings will come in below what it made last year in part on weaker earnings from its sugar division.

Indexes: The U.K.’s FTSE 100 UKX, +0.52% rose 0.5% to 6,074.52, aided by Glencore’s surge. Germany’s DAX 30 DAX, +0.70% rose 0.7% to 10,108.61, and France’s CAC 40 PX1, +0.59% gained 0.6% to 4,549.64.

China impact: The Stoxx 600 last week fell 2.8%, with global equity markets being hit in recent weeks on fears about slowing growth in China, the world’s second-largest economy. Markets were also weighed by speculation the Federal Reserve may raise interest rates in the U.S. at its meeting next week, at a time of intense market volatility and questions about global growth.

People’s Bank of China Governor Zhou Xiaochuan over the weekend told central bankers and finance ministers from the Group of 20 largest economies that the “correction in the stock market is almost done,” and that the Chinese yuan is steadying after a devaluation last month.

China’s foreign-exchange reserves fell to $3.56 trillion at the end of August, as the nation’s central bank intervened in the currency market.

The data “suggest that the People’s Bank is not burning through its reserves as quickly as many had believed,” said Julian Evans-Pritchard, China economist at Capital Economics, in a note.

In Shanghai, the main benchmark Shanghai Composite Index SHCOMP, -2.52% ended a choppy session Monday down by 2.5%.

While investors are worrying about a spillover effect from China’s economic slowdown, the latest U.S. growth and jobs data “were reassuring,” said Société Générale analysts in a note Monday. “In the eurozone, figures are also positive,” in part as unemployment has dropped to a three-year low.

“And, if the situation deteriorates, the Fed could delay its hiking, to which the European Central Bank could react by extending its [quantitative easing] program,” they said.