Europe stocks up as HSBC, PMI support; airlines off

LONDON (MarketWatch) — European stock markets moved higher on Monday, lifted by HSBC Holdings PLC after the heavyweight bank posted results, while the broader market welcomed encouraging data on euro-zone factory activity. Airline and travel stocks were among the biggest losers, after Ryanair Holdings PLC cut its outlook and warned of falling fares.

The Stoxx Europe 600 index (XX:SXXP)  rose 0.4% to 322.61, extending gains seen last week, when the benchmark scored its fourth weekly advance in a row.

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Banks helped support the main Europe index, with HSBC (UK:HSBA)   (HBC)   (HK:5)  up 2.4% after posting a 28% rise in third-quarter profit. The gain helped lift the U.K.'s FTSE 100 index (UK:UKX)  0.5% to 6,767.10.

Shares of Ryanair (IE:RY4B)  led the decliners list, tumbling 12% after the Irish-based budget airline cut its full-year guidance due to a dip in average fares. Ryanair said it expects fares to fall by a further 9% in the third quarter and by up to 10% in the fourth quarter.

The news rippled through the sector, with EasyJet PLC (UK:EZJ)  losing 4.1%, Thomas Cook Group PLC (UK:TCG)  down 2.5%, and Air France-KLM SA (FR:AF)  dropping 2.1%.

Shares of Weir Group PLC (UK:WEIR)  were also being hit hard, off 7.1% after the engineering company cut its 2013 revenue expectations due to further project-delivery delays and industrial unrest in South Africa.

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More broadly, investors welcomed data that showed euro-zone factory activity edged higher in October, thanks to modest strength in Germany and other northern economies. The Markit manufacturing purchasing managers' index for currency bloc rose to 51.3 from 51.1 in September, above the 50 threshold that separates expansion from contraction. The reading was unchanged from an earlier estimate.

"More encouraging indications about the recovery can be gained by looking at increasingly broad-based nature of the upturn, and especially the fact that increasingly robust gains in production are now being seen in countries such as Spain, Italy and Ireland, to suggest that structural reforms to boost competitiveness are starting to pay off," said Chris Williamson, chief economist at Markit, in the release.

PMIs were also in the spotlight in China, where the country's official non-manufacturing purchasing managers' index rose to 56.3 in October, marking a 14-month high.

Some miners pushed higher after the data, as China is a big user of natural resources. Shares of Rio Tinto PLC (UK:RIO)   (RIO)   (AU:RIO)  rose 2.5%, and shares of BHP Billiton PLC (UK:BLT)   (BHP)   (AU:BHP)  gained 1.1%.

Among other notable movers, shares of PostNL NV (NL:PNL) jumped 6.4% after the Dutch mail firm lifted its full-year outlook.

The German DAX 30 index (DX:DAX)  rose 0.3% to 9,037.55, while the French CAC 40 index (FR:PX1)  added 0.3% to 4,285.02.