Share

European shares hit 2-month high

London - European shares rose on Wednesday, with a key index hitting a two-month high, on speculation about a possible ceasefire in eastern Ukraine and fresh monetary stimulus from the European Central Bank (ECB).

The Kremlin said on Wednesday President Vladimir Putin and Ukrainian leader Petro Poroshenko had agreed on steps towards peace in eastern Ukraine, even though a ceasefire had not been agreed between Moscow and Kiev because Russia is not a party to the conflict.

Trading was nervy, however, as authorities seemed to send mixed messages, with Poroshenko's press office earlier saying both presidents had agreed on a "permanent ceasefire".

At 12:21, the FTSEurofirst 300 index of top European shares was up 0.9% at 1 388.04 points, having earlier hit its highest level since July 7 at 1 391.56 points.

The eurozone blue-chip Euro STOXX 50 was up 1.3% at 3 221.40 points.

Shares in Russia-exposed companies were among top gainers.

Austrian lender Raiffeisen Bank International, which relies heavily on Russia for profits, and Danish brewer Carlsberg, which has a large exposure to the country through its Baltika brand, rose 5.4% and 3.2%, respectively.

Sentiment on the broader market was also underpinned by speculation that the ECB, due to hold a policy meeting tomorrow, might be compelled to launch an asset-purchase programme, or quantitative easing (QE), to shore up inflation in the eurozone after a further batch of weak economic data.

Markit's Composite Purchasing Managers' Index showed eurozone business grew at the slowest rate this year in August as escalating tension between Russia and Ukraine subdued spending and investment.

"(It's the) extension of the (ECB) trade, massaged by further weak PMI numbers and the intensity of the QE call, and even more so the (potential) Putin-organised ceasefire in Ukraine," Andy Ash, head of sales at Monument Securities, said.

Dovish comments by ECB President Mario Draghi in late August sparked market bets on upcoming stimulus. However, ECB sources told Reuters last week that new action this Thursday was unlikely but not impossible, and that the barrier to QE was still "very high".

"We're expecting a strong verbal commitment from Draghi on Thursday," said Romain Boscher, global head of equities management at Amundi, which has €821bn under management.

"The ECB still has plenty of ammunition left, and it will certainly use it when needed. The prospect of further action from the central bank remains very supportive for risky assets such as equities."

Bucking the trend was French luxury handbag maker Hermes, which tumbled 5.7% in huge volumes after it struck a deal with bigger rival LVMH that resolves their dispute over LVMH's 23.2% stake in the maker of Birkin and Kelly handbags.

German retailer Hugo Boss dropped by 5.2% after an investment company controlled by private equity investor Permira placed an 11% stake of the company's total capital.


 

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.02
-0.6%
Rand - Pound
24.01
-0.5%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.36
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.50
+0.4%
Palladium
1,002.25
+0.1%
Gold
2,211.80
+0.8%
Silver
24.62
-0.1%
Brent Crude
86.09
-0.2%
Top 40
68,080
+0.6%
All Share
74,278
+0.5%
Resource 10
56,967
+2.4%
Industrial 25
103,572
+0.3%
Financial 15
16,456
-0.4%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders