European stocks were little changed on Friday, paring gains in the final minutes of trading amid an increase in mergers and acquisitions (M&A) activity.
Shire PLC surged to a record after AbbVie Inc said the drugmaker rejected an enhanced bid of as much as £27.3 billion (US$46.5 billion), while TSB Banking Group PLC rallied 12 percent and Euronext NV fell 2 percent on their trading debuts.
The STOXX Europe 600 Index advanced 0.3 percent for the week, trading near its highest level since 2008. European Central Bank (ECB) Vice President Vitor Constancio on Thursday signaled that large-scale asset purchases are the next step policymakers are prepared to take if the inflation outlook worsens.
The comments came after ECB President Mario Draghi on June 5 announced new long-term refinancing operations and lowered interest and deposit rates for the eurozone in an attempt to boost inflation.
“Both the ECB and the Fed have come out with supportive comments or things the market has interpreted as supportive,” Jonathan Golub, chief US market strategist for Toronto-based RBC Capital Markets LLC, said by telephone. “If you look at both of those, by saying that they’re less concerned about inflation, that’s ultimately positive.”
“I expect that M&A activity in Europe will go on till the end of the year,” Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna, said by telephone. “A lot of companies are sitting on a pile of cash. Some US companies will get a tax advantage by buying European companies, so I expect cross-border deals to continue. We may see some volatility because of quadruple witching.”
Options and futures on European stocks and indexes expired on Friday, increasing volatility. Changes to indices including the STOXX 600, France’s CAC 40, the UK’s FTSE 100, Spain’s IBEX and Norway’s OBX come into effect this weekend.
National benchmark indices dropped in 12 of the 16 Western European markets that opened on Friday. Markets in Sweden and Finland were closed for the Midsummer holiday.
The FTSE 100 rose 0.3 percent in the week’s final session from its 6,777.85 points close on June 13, while Germany’s DAX slipped 0.2 percent from 9912.87 and the CAC 40 fell 0.5 percent from 4543.28.
An index of eurozone consumer confidence this month fell unexpectedly to minus-7.4 from minus-7.1 last month, according to a preliminary report from the European Commission. The median estimate of economists in a Bloomberg survey had called for an increase to minus-6.5.
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