European Shares Surge on China's Stimulus, Luxury Stocks and Miners Lead Gains

European shares opened higher on Tuesday, boosted by China's comprehensive stimulus measures. The STOXX 600 index rose by 0.8%, with luxury companies and miners seeing significant gains. Meanwhile, UK engineering firm Smiths Group's annual profit miss led to a 6.7% drop in its stock price.

European shares experienced a notable rise on Tuesday as China's extensive stimulus measures provided a significant boost to luxury companies and miners. The pan-European STOXX 600 index climbed 0.8% to 520.40 points by 0711 GMT, while France's CAC 40 outshone its peers by rising 1.4%. This surge came after China's top financial regulators announced their largest stimulus effort since the pandemic, which includes reducing bank reserves by 50 basis points and cutting mortgage rates.

Luxury companies heavily dependent on Chinese consumer spending saw the biggest gains, with LVMH, Hermes, Kering, and Dior rising between 3.8% and 4%. Basic resources also led sectoral gains, jumping 4.4% as copper prices reached a two-month high, buoyed by China's measures and increased regional demand. The FTSE in Britain gained 0.4%, driven by rising stocks of metal miners on China's stimulus news.

Investors will be closely monitoring remarks from European Central Bank board member Elizabeth McCaul later in the day, alongside the upcoming release of data on German business morale at 0800 GMT. However, it wasn't all positive for individual stocks; the UK engineering firm Smiths Group saw its shares plunge by 6.7% after missing annual profit estimates.

(With inputs from agencies.)