Sun, Mar 12, 2017 - Page 14 News List

Europe pares earnings as ECB discusses rate hike


European stocks on Friday trimmed earlier gains, trading little changed after people familiar with the matter said the European Central Bank (ECB) discussed whether interest rates can rise before its bond-buying program comes to an end.

The STOXX 600 added less than 0.1 percent at 4:11pm in London, paring its weekly decline to 0.6 percent.

The benchmark on Friday erased an intraday drop after ECB President Mario Draghi said downside risks to the euro-area economy were less pronounced.

ECB Governing Council members meeting on Thursday exchanged views on ways of communicating and sequencing an exit from unconventional stimulus, according to people familiar with the matter.

The Dutch AEX rose above its 2015 closing high and reached its highest level since December 2007.

BT Group PLC rose 3.8 percent after it agreed to legally split off its Openreach network division into a separate entity as demanded by Britain’s telecommunications regulator.

“We see this as positive for investor sentiment on BT in terms of removing a notable overhang, an absence of negative surprises and avoiding a prolonged period of uncertainty had Ofcom taken its case to the EC,” analysts at UBS said in a note.

Akzo Nobel NV rose 4.6 percent after Het Financieele Dagblad reported PPG Industries is preparing a second bid for the coatings maker.

Energy shares led STOXX 600 gains after dropping for four straight sessions.

BNP Paribas SA strategists say European equities could outperform the US.

“Eurozone equities have outperformed US equities over the past two weeks, since our ‘love panic’ model suggested that investors are pricing excessive optimism for US equities and pessimism for eurozone equities,” the firm’s equity and derivatives strategists wrote in a note.

Stronger-than-expected jobs data in the US earlier on Friday also helped, further cementing expectations of a rate hike next week in the world’s largest economy. Futures traders are betting that an increase in interest rates at next week’s US Federal Reserve meeting is a virtual certainty.

“Higher yields mean that [financials] will have better prospects for revenues, less pressure on their shoulders to generate revenues,” London Capital Group senior market analyst Ipek Ozkardeskaya said.

Additional reporting by Reuters

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