Sun, May 29, 2016 - Page 15 News List

European stocks extend rally on US optimism

Bloomberg

Philips Lighting NV chief executive Eric Rondolat bangs a gong to indicate the start of trading at the Amsterdam Stock Exchange in the Netherlands, on Friday.

Photo: Bloomberg

European stocks extended a third weekly increase, amid optimism that the economy is strong enough to withstand higher US borrowing costs, as traders awaited a speech by US Federal Reserve Chair Janet Yellen.

The STOXX Europe 600 Index added 0.2 percent at the close of trading in London, taking its advance to 3.4 percent for the week.

The number of shares on the gauge changing hands was about 20 percent lower than the 30-day average, before holidays in the UK and the US tomorrow.

European shares posted their best weekly gains since February, resuming a rally that had stalled after a 16 percent rebound from a low that month.

After hawkish comments from Fed officials, traders increased the chances of an interest-rate increase next month to 30 percent and to 54 percent for July.

Data showed the US economy in the first quarter expanded at a slightly faster pace than initially estimated, and Yellen spoke on Friday after the close of European markets.

“The markets have been prepared and have had time to price it in,” said Otto Waser, head of investment research at R&A Group Research & Asset Management in Zurich, referring to a potential rate increase. “A Fed rate hike doesn’t change anything, but gives more confidence that the US economy is on track.”

The region’s benchmark gauge posted its longest streak of weekly gains since March and closed 0.3 percent away from its April 20 high.

On Friday, steelmaker Voestalpine AG climbed 2.7 percent after Berenberg wrote in a note that the company is benefiting from strength in the auto industry.

Roche Holding AG led gains among healthcare companies, up 4 percent, after its Genentech unit reported positive drug results.

Satellite-services provider SES SA slumped 10 percent after a stock offering. Banco Popular Espanol SA fell for a second day, extending a record low, after its biggest slump since 1999 following a share sale.

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