European equities climbed with the British pound as a rally in oil lifted energy stocks and speculation built that the suspension of “Brexit” campaigning after a lawmaker’s murder supported opponents of UK secession. Treasuries fell as demand for havens cooled.
The STOXX Europe 600 Index posted its biggest gain in three weeks, while sterling rebounded from a two-month low after campaigning over whether the UK should quit the EU was on hold a second day after the killing of Jo Cox, a Parliament member who supported voting to stay in next week’s referendum.
US crude snapped a six-day losing streak and industrial metals rallied. The S&P 500 Index extended a weekly drop amid the expiration of futures and options contracts.
Odds on the UK leaving the EU slid as low as 36 percent after hitting a record 44 percent on Thursday, according to Oddschecker calculations based on bookmakers’ quotes.
Anxiety stemming from Brexit had curbed demand for riskier assets over the past week. Global stocks clawed back some losses on Friday as an opinion poll on British voters’ intentions on Thursday was delayed.
“The market turned, more than anything, because some of the hedge fund-embedded bets took an abrupt turn when the probabilities changed,” said Jim Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management Inc, which oversees US$337 billion. “At a minimum, a move away from Brexit was augmented by the unfortunate incident when the British minister was shot. That suspended the hot debate and if anything it seemed to mute some Brexit momentum.”
The STOXX 600 jumped 1.4 percent, trimming a third week of losses, while the MSCI index of global equities rose 0.5 percent at 12:45pm in New York. Banks and energy producers led gains in both benchmarks.
Some traders saw a natural evolution in odds against Brexit as the vote neared, citing the experience of Scotland’s independence vote in September 2014.
The S&P 500 fell 0.5 percent, after the index snapped a five-day losing streak on Thursday. The benchmark is headed for its biggest weekly decline since February. Healthcare and technology shares, groups that have been among the market’s weakest all year, contributed the most to losses yesterday.
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