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Frankfurt - European stocks headed for their biggest two-day rally in two weeks on growing confidence that central banks will keep monetary policy supportive.
The Stoxx Europe 600 Index climbed 0.3% to 338.77 at 11:58, trimming its weekly loss to 0.9%. Shares rebounded yesterday, with those in the UK capping their biggest jump since June, after the Bank of England unveiled fresh stimulus measures to help the economy cope with European stocks headed for their biggest two-day rally in two weeks on growing confidence that central banks will keep monetary policy supportive.the repercussions of the Brexit vote.
Optimism that central banks will do what’s needed to protect economic growth and contain the fallout from Britain’s decision to leave the European Union has sparked a tentative return of bullish sentiment, albeit amid low-volume trading. The number of shares changing hands on the Stoxx 600 today was 38% below the 30-day average at this time of day.
“There’s a lot of hope that central banks can counter any downside to growth, especially after the Bank of England shot a pretty big torpedo yesterday,” said Dirk Thiels, head of investment management at KBC Asset Management in Brussels.
“That’s very reassuring after so much talk that monetary stimulus had reached the end of its capacity. But anxiety about the economy can just as easily come back as it went away. It’s important that the US holds strong, as that also helped bring optimism back to markets.”
Investors will also look today at the latest US employment data to gauge the health of the world’s biggest economy and the likely trajectory of Federal Reserve monetary policy. Economists predict payrolls rose by 180 000 last month, less than in June, while the unemployment rate dropped back to 4.8%.
BHP Billiton and Rio Tinto added at least 3%, leading a gauge of commodity producers to the biggest gain of the 19 industry groups on the Stoxx 600 as metals prices rebounded.
Among stocks moving on corporate news, Evonik Industries rose 3.4% after the chemical maker reported a smaller-than-projected drop in quarterly earnings.
LafargeHolcim jumped 5.6% as second-quarter earnings improved more than analysts had expected and the cement producer pledged to sell more assets. Hugo Boss added 6% after the German fashion label posted better-than-expected revenue.
Allianz slipped 4.3% after the insurer said second-quarter profit fell by almost half, missing analysts’ estimates, amid higher claims arising from natural disasters and charges for the sale of its South Korea unit.
Royal Bank of Scotland declined 5.1% after the British lender posted a larger second-quarter loss than projected and gave no update on the planned sale of its Williams & Glyn consumer bank.
Novo Nordisk tumbled 8.1% as the biggest maker of insulin trimmed its forecasts for annual sales and profit amid intensifying pricing pressure in the US.
