European stocks rose to a four-week high amid optimism the Bank of Japan’s (BOJ) stimulus would fill some of the gap left by the end of US Federal Reserve bond buying.
The STOXX Europe 600 Index gained 1.8 percent to 336.8 at the close of trading on Friday, boosting its weekly advance to 2.9 percent, the most this year. Barclays PLC and BNP Paribas SA led lenders higher, as all 19 industry groups on the gauge climbed.
The equity benchmark dropped 1.8 percent last month, the most since June last year, amid concern that the European Central Bank’s (ECB) asset purchases would not be enough to revive the region’s economy. With the US Federal Reserve ending purchases this month, investors are turning to Europe and Japan for sustained support.
The BOJ unexpectedly boosted its stimulus, raising its annual target for monetary expansion to ￥80 trillion (US$717 billion), up from ￥60 trillion to ￥70 trillion.
“Markets don’t really seem to care about what kind of stimulus we get or where it’s coming from, as long we get something,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit.
“Central banks are trying to squeeze money into the system and as long as economic growth is good enough, all that money will be going into financial assets. What happened in Japan is very powerful for equities, and it’s really rippling throughout global markets,” Knuthsen added.
Investors weighed a report that showed euro-area inflation increased this month for clues about the ECB’s policy stance at its meeting next week. The central bank aims to take inflation closer to 2 percent, while the rate has stayed below 1 percent for a year.
Benchmark indices in 16 of the 18 Western European markets rose on Friday. The UK’s FTSE 100 gained 1.3 percent, while France’s CAC 40 advanced 2.2 percent. Germany’s DAX rallied 2.3 percent.
Barclays rallied 8.2 percent to ￡2.408 for its biggest increase since February last year, after saying it is confident of reaching the leverage ratio set by the Bank of England. The central bank on Friday set a minimum level of 4.05 percent from 2019, lower than analysts estimated.
BNP Paribas rose 3.5 percent to 50.14 euros after posting an 11 percent gain in third-quarter profit that exceeded analysts’ estimates. Net income was 1.5 billion euros (US$1.89 billion), up from 1.36 billion euros a year earlier, the lender said. Loan-loss provisions fell 9.2 percent.
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