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Frankfurt - European stocks were little changed, after posting their best weekly gain since February, as investors considered the implications of a possible increase in US interest rates after Federal Reserve Chair Janet Yellen said a hike is likely in the coming months.
The Stoxx Europe 600 Index added 0.1% to 349.87 at 09:11. The number of shares on the gauge changing hands was about 46% lower than the 30-day average. Financial markets in the US and UK are shut for holidays.
Yellen said late Friday that an improving American economy would probably warrant another increase in borrowing costs “in the coming months,” a view also expressed by several regional Fed chiefs in recent weeks.
She was speaking after data showed US growth picked up more than was previously estimated in the first quarter. Traders have increased the odds of an interest-rate increase in June to 30% and to 54% for July.
European stocks last week capped their longest streak of weekly gains since March and are 0.3% away from an April 20 high. Still, investors continued to pull money out of the region’s funds, bringing the total withdrawals to $39bn in 16 weeks, according to a Bank of America note citing EPFR Global data.
With an average of about 2.7 billion shares changing hands each day in May, trading in the Stoxx 600 was the slowest since December.
After starting the year with bullish calls, strategists and analysts have become increasingly skeptical about European equities, projecting flat annual returns in the Stoxx 600 and a decline in corporate profits. Following a mixed earnings season, European investors are facing a referendum on Britain’s membership in the European Union and a general election in Spain.
For details of how a winning month for European stocks went uncelebrated, read here.
Among stocks moving on corporate news today, Belgian postal company Bpost SA fell 1.3% after saying it failed to reach an agreement to buy PostNL of the Netherlands in a surprise announcement following speculation of an imminent merger. PostNl NV gained 5.2%.
Banco Popular Espanol SA added 1.3% after Spanish newspaper Expansion reported the lender has orders exceeding €4bn for its €2.5bn planned capital increase.
Bayer rose 0.7% after people familiar with the matter said the chemical company is close to choosing banks to arrange funds for its proposed acquisition of Monsanto.
