http://www.bloomberg.com/apps/news?pid=20601085&sid=aZtdmCC6fdJw&refer=europeNov. 20 (Bloomberg) -- European stocks rebounded from a three-month low, led by chemical producers and carmakers, as investors speculated the sell-off was overdone given the prospects for corporate profits.
BASF AG, the region's biggest chemical company, and PSA Peugeot Citroen advanced. ICAP Plc, the world's largest broker of transactions between banks, led financial-services stocks higher after reporting a jump in profit.
The Dow Jones Stoxx 600 Index added 1.1 percent to 358.65. The index has retreated 7.7 percent this month on increasing concern that losses tied to U.S. subprime mortgages will spill over to the broader economy.
``The recent sell-off was a bit exaggerated,'' said Carlo Luoni, who manages the equivalent of $180 million at 8A+ Sgr SpA in Varese, Italy. ``Valuations are interesting.''
The relative strength index on the Stoxx 600 closed yesterday at 26.5. A reading below 30 may indicate the index is poised to rise, according to technical analysts.
The Stoxx 600 was valued at 12.8 times earnings last week, the cheapest in at least five years, according to weekly data compiled by Bloomberg.
Analysts expect profit growth for Stoxx 600 companies will accelerate to 10.4 percent next year from 9.1 percent in 2007, Bloomberg data based on analysts' estimates shows.
European government notes snapped a three-day rally, while the dollar fell to a record low against the euro.
National Markets
National benchmarks rose in 14 of the 18 western European markets. The U.K.'s FTSE 100 gained 1.7 percent, and Germany's DAX climbed 1.6 percent. France's CAC 40 added 1.4 percent. The Stoxx 50 advanced 1 percent, while the Euro Stoxx 50, a measure for the euro region, rose 1.2 percent.
BASF advanced 3.7 percent to 90.71 euros, after closing yesterday at the lowest since June 8. Peugeot, Europe's second- biggest carmaker, increased 2.8 percent to 53.25 euros.
ASML Holding NV, Europe's largest maker of semiconductor equipment, gained 1.9 percent to 22.48 euros. The stock lost 11 percent in the month through yesterday.
ICAP jumped 13 percent to 645 pence, the best performance in the Stoxx 600. The London-based company said first-half profit increased 34 percent 80.1 million pounds ($164.4 million) after the slump in credit markets spurred record trading in currencies, bonds and their derivatives. Earnings topped the 72.8 million- pound estimate in a Bloomberg survey.
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