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European shares extend gains

Published : Friday, 24 January, 2020 at 4:52 PM  Count : 196

European shares extend gains

European shares extend gains

European shares extended gains on Friday after a key monthly business activity report from Germany suggested the euro zone’s largest economy may be picking up some steam at the start of 2020.

The report added to investor relief after the World Health Organization stopped short of calling a virus outbreak in China a global emergency. The pan-European STOXX 600 climbed 1.2% following four consecutive sessions of declines, Reuters reports.

Germany's DAX .GDAXI was on course for its best day in about two weeks after IHS Markit's Purchasing Managers' Index (PMI) showed the country's private sector gained momentum in January and a pullback in manufacturing had eased.

The report comes on the heels of a ZEW survey, which showed the recent truce in the U.S.-China trade dispute left German investors at their most optimistic since mid-2015.

The PMI data “seems to confirm (European Central Bank President) Lagarde’s remarks that the economic risks have become less pronounced so that’s a positive,” said Teeuwe Mevissen, senior eurozone market economist at Rabobank.

“At the same time she said interest rates will remain low for the foreseeable future so even as the risks have become less pronounced, markets can still count on the ECB to maintain interest rates at very low levels.”

Lagarde struck a slightly more dovish tone than some had expected following the central bank’s first policy meeting of he year on Thursday.

Gains in bank stocks .SX7P provided the biggest support to the benchmark index. All major European subsectors were trading higher.

Investors are now waiting for UK PMI readings, due at 0930 GMT, which will be crucial ahead of the Bank of England’s interest rate decision next week.

Among stocks, Bayer (BAYGn.DE) provided the biggest boost to DAX after a report on a possible out-of-court settlement of a U.S. jury trial over allegations that its weed killer Roundup causes cancer.

Swedish telecoms equipment group Ericsson (ERICb.ST) was on track for its worst day in about six months after it reported a smaller-than-expected rise in fourth-quarter core earnings. Shares of its rival Nokia (NOKIA.HE) slipped 0.8%.

Nokian Tyres (TYRES.HE) hit a more than three month low as the Finnish tyre maker forecast its 2020 sales and operating result to significantly decline from a year earlier due to weak performance in its Russia operations.

Shares of French pharma company Ipsen (IPN.PA) tumbled 22% to the bottom of STOXX 600 after it paused dosing in rare bone diseases drug, palovarotene.


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