European stocks rebounded on Friday following sharp losses the previous session, as markets tracked a meeting of the world’s biggest economies in Japan.
London’s benchmark FTSE 100 index and the Paris CAC 40 both rallied 1.7 percent by the close, while Frankfurt’s DAX 30 index won 1.2 percent.
Europe’s main stock markets had slumped on Thursday, with London shedding 1.8 percent in value, as traders reacted to concerns about a possible US rate hike next month.
In foreign exchange Friday, the euro rose to US$1.1208 from US$1.1203 late in New York on Thursday.
“Risk appetite has returned to equity markets,” said Mike van Dulken, head of research at traders Accendo Markets. “An easing in dollar strength helping commodity prices hold up and oil pointing back towards US$50 is helping reinstill confidence.”
Markets were following a meeting in Japan of finance ministers and central bankers from the G7 economies.
Two days of talks will see the host nation keen to win an endorsement for its position that fiscal stimulus is the way to kickstart the world economy, after a rally in the yen hit exporters and worsened a slowdown at home.
However, Tokyo’s recent threat of a market intervention to reverse the rally could put it on a collision course with its G7 counterparts, including the US and Germany, which have ruled out such moves.
“Investors were keeping half an eye on the G7 meeting in Japan in the unlikely event that finance ministers put differences aside for a coordinated effort to revive global growth,” CMC Markets analyst Jasper Lawler said.
“Global markets meandered higher on Friday as anxiety about a summer rate hike in the US eased,” he added.
Minutes from last month’s US Federal Reserve policy meeting, published this week, implied that the US central bank viewed a rate hike next month as a much more serious possibility than the market believed.
“I expect markets to remain incredibly unsettled” ahead of next month’s policy meeting, Oanda senior trader Stephen Innes said.
Shares in the London Stock Exchange (LSE) and Deutsche Boerse both took a knock after French Minister of Finance Michel Sapin said their planned merger poses competition problems.
LSE shares dropped 1.0 percent and Deutsche Boerse shed 0.9 percent.
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