Sun, Jan 15, 2017 - Page 14 News List

Banks propel European shares

RISING STAR:With the US Federal Reserve expected to undertake additional rate hikes in 2017, banks are becoming popular again, a London-based trader said

Bloomberg and Reuters, LONDON

European stocks rose, eking out a third weekly advance, as banks rallied after fourth-quarter earnings from US lenders, while automakers and healthcare shares bounced back from their biggest declines in months.

The STOXX Europe 600 Index gained 1 percent at the close on Friday.

The European banking index was the top sectoral gainer, up 2 percent, helped by strong earnings from large lenders in the US and the outlook for higher interest rates in the world’s largest economy.

“With the [US Federal Reserve] having raised rates last month and is expected to undertake additional hikes in 2017, banks are gaining on popularity again between investors, especially as many funds are still underweight this sector,” Markus Huber, trader at City of London Markets, said.

Healthcare shares climbed, halting a two-day decline prompted by concern over price pressures under Donald Trump’s US presidency.

The rebound in the STOXX 600 helped erase a weekly decline, with the gauge ending 0.1 percent higher for the period.

The UK’s FTSE 100 Index completed 14 straight daily gains, extending a record winning streak, as well as an 12th consecutive record close.

Automakers recovered after tumbling the most since July last year on US government accusations that Fiat Chrysler Automobiles NV violated pollution laws.

Fiat Chrysler jumped 4.6 percent after Thursday’s 16 percent plunge as chief executive officer Sergio Marchionne dismissed the US allegations as “unadulterated hogwash.”

The automaker is under investigation by the US Department of Justice over its alleged failure to disclose software that violated emissions standards, Bloomberg News reported after European markets closed, citing people familiar with the matter.

Italian stocks dominated the list of top performers on the STOXX. Investment company Exor, which has a stake in Fiat, rose more than 6 percent on Friday.

UBI Banca surged 9.6 percent, the top STOXX gainer, after HSBC Holdings PLC raised its target price for the stock following the bank’s forecasts on Thursday to generate a net profit of 1.2 billion euros (US$1.28 billion) by 2020, up from 900 million euros under current business plan.

Traders are more optimistic than analysts on Euro STOXX 50 Index dividends for this year.

Futures contracts are pricing in a 2017 payout about 0.5 point higher than the Bloomberg dividend forecast.

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