Plus   Neg

European Stocks Snap 3-day Losing Streak, End On Firm Note

European stocks recovered after a weak start and ended notably higher on Friday, with investors making some brisk purchases amid optimism about a potential coronavirus vaccine and on stronger-than-expected economic data from France and Italy.

Easing of lockdown measures in the U.K. contributed a bit to the positive sentiment in European markets. As per UK government's move, quarantine measures for those travelling to the UK from around 70 countries will no longer apply. This triggered some buying in travel and aviation stocks.

However, with new cases of coronavirus infections in the U.S. and some other countries continuing to surge, gains in some of the markets were less pronounced.

The pan European Stoxx 600 advanced 0.88%. The U.K.'s FTSE 100 moved up 0.76%, Germany's DAX gained 1.15% and France's CAC 40 climbed 1.01%, while Switzerland's SMI ended stronger by 0.85%.

Among other markets in Europe, Austria, Belgium, Finland, Ireland, Netherlands, Poland, Portugal, Russia, Spain and Sweden closed on a firm note.

Denmark and Norway edged up marginally, while Czech Republic, Greece, Iceland and Turkey closed weak.

In the U.K. market, Carnival and Barclays surged up 5.6% and 5.2%, respectively. Whitbread, Rolls-Royce Holdings, Melrose, Evraz, Bunzi, Royal Bank, Legal & General and J Sainsbury gained 3 to 4%.

CRH, Hiscox, Admiral Group, Anglo American, Morrison Supermarkets, National Grid, M&G, Standard Life and Lloyds Banking also rose sharply, while Hikma Pharmaceutical, Associated British Foods, British American Tobacco and GlaxoSmithKline ended notably lower.

In the French market, Sodexo, STMicroElectronics, Valeo, Airbus, Credit Agricole, Societe Generale, Renault, BNP Paribas, ArcelorMittal, Unibail Rodamco, Air Liquide and Peugeot gained 2 to 5%.

In Germany, HeidelbergCement rallied more than 5%. Infineon Technologies, Thyssenkrupp, Volkswagen, Deutsche Bank, Siemens, BMW and Continental gained 2 to 4%. Daimler, Allianz, RWE, Deutsche Telekom and Henkel also closed on a firm note.

On the other hand, Wirecard tumbled more than 5% and Lufthansa ended lower by 1.6%.

In economic releases, European Council President Charles Michel laid out a plan for long-term budget and recovery for the coronavirus-hit members of the European Union, one week ahead of a summit of the 27 leaders.

In the revised proposal that Michel presented, the size of the European long-term budget called Multi-annual Financial Framework (MFF) is envisioned at EUR 1.074 trillion. The proposal was initially discussed on June 19 and attracted strong opposition from some members. Subsequently, Michel held bilateral negotiations with all leaders.

The rebates for Denmark, Germany, the Netherlands, Austria and Sweden will be maintained, Michel said. He proposed the size of the Covid-19 Recovery package to be EUR 750 billion and these funds can be used for back-to-back loans and spending through MFF programmes.

"This is an exceptional and one-off tool for an exceptional situation," Michel said.

He also laid out a proposal for a Brexit reserve of EUR 5 billion to counter the unforeseen consequences of the UK's exit from the EU in the most affected member states and sectors.

Data from the statistical office Insee showed France's industrial output grew 19.6% on a monthly basis, reversing a 20.6% fall in April. This was the first rise in three months. Production was forecast to climb 15.1% in May. At the same time, manufacturing output advanced 22%, in contrast to a 22.3% fall in the previous month.

Italy's industrial production recovered at a faster than expected rate in May as factories reopened after coronavirus containment measures were eased, figures published by the statistical office Istat revealed. Industrial production advanced 42.1% on a monthly basis in May, in contrast to a 20.5% fall in April. Output was expected to rise 22.8%.

On a yearly basis, industrial output fell 20.3%, but slower than the 43.4% decrease posted a month ago. Economists had forecast an annual decline of 32.5%. The unadjusted industrial production decreased 25% from last year, after declining 41.6% in April.

On vaccine news, U.S. firm Gilead Sciences (GILD) said its drug remdesivir showed a sharp mortality risk drop when used to treat patients suffering of coronavirus.

For comments and feedback contact: editorial@rttnews.com

Follow RTT