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European Shares Rise As Taper Bets Recede

stockmarkets aug17 11jun21 lt

European stocks hovered near record highs on Friday, as bond yields fell from the United States to Europe despite signs of rising U.S. inflation.

Investors are pinning hopes that rising price pressures will be transitory and the Federal Reserve is unlikely to withdraw monetary support any time soon.

Investors await the Federal Reserve's monetary policy meeting next week for more clues about the state of the economy and policy outlook.

The pan European Stoxx 600 rose 0.4 percent to hit a record high and was on course for sixth straight day of gains.

The German DAX edged up 0.2 percent, France's CAC 40 index gained 0.4 percent and the U.K.'s FTSE 100 was up 0.6 percent.

Spanish hotel chain Melia jumped 2 percent. Chief Executive Gabriel Escarrer said on Thursday at the annual shareholders meeting that the company expects to return to profitability in June after 15 months in the red.

A rise in metals prices boosted miners, with Anglo American, Antofagasta and Glencore rising around 2 percent.

Sanne Group shares jumped 11.5 percent in London. The specialist fund administrator confirmed that it has received a fifth unsolicited, non-binding proposal from Cinven regarding a possible all cash offer at a price of 875 pence per share.

Banks fell broadly as Euro zone government bond yields fell after a dovish outcome to Thursday's ECB meeting. Commerzbank lost 2.8 percent, Deutsche Bank tumbled 3.3 percent and Societe Generale gave up 1.3 percent.

In economic releases, the U.K. economy grew at the fastest pace since July 2020 as government restrictions affecting economic activity continued to ease in April, data from the Office for Statistics showed.

Gross domestic product rose 2.3 percent month-on-month in April, faster than the 2.1 percent expansion seen in March. The rate was forecast to improve to 2.2 percent.

The German economy is projected to grow faster than previously estimated on the expectation that the vaccination campaign will suppress the pandemic quickly and sustainably, Bundesbank said in its bi-annual report.

The central bank forecast the largest euro area economy to expand 3.7 percent in 2021 versus 3 percent projected earlier. The outlook for 2022 was raised to 5.2 percent from 4.5 percent.

In 2023, real GDP growth is set to lose momentum, but will still grow 1.7 percent, Bundesbank said.

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