European shares rose for the fourth consecutive week on Friday as confidence over the region’s economic recovery outweighed worries over the Catalonia crisis, whose impact remained confined to Spanish equities.
While Spain’s IBEX ended a tumultuous week down 1.9 percent after a banned referendum last weekend in the wealthy Spanish region overwhelmingly backed independence, the pan-European STOXX 600 fell 0.4 percent on the day, but posted a five-day gain of 0.3 percent.
Redemptions in Spanish stock funds hit their highest level in nearly three years over the past week as investors became alarmed by the confrontation between Madrid and Catalonia, EPFR Global data showed.
However, flows into European equity funds exceeded US$1 billion for the third week running as the region’s economic recovery retained its momentum, EPFR added.
Credit Suisse Group AG international wealth management chief investment officer Michael O’Sullivan said he did not expect to change investment strategy because of events in Spain.
“It’s very easy to get stuck in these debates and get focused on the politics,” he said. “Therefore, as a discipline we just look at the market and macro impact.”
The investment committee of the Swiss bank, which is neutral on global equities, affirmed its outperform rating on eurozone stocks earlier this week, saying a still-dovish monetary policy backdrop and solid economic momentum should provide support.
A Reuters poll suggests the eurozone STOXX 50 is set to end up 11 percent this year.
On Friday, Spain apologized for the violent police crackdown on Catalonia’s independence referendum, in a conciliatory gesture as both sides looked for a way out of the nation’s worst political crisis in decades.
Shares in Catalonia-headquartered CaixaBank SA and Banco Sabadell SA fell 0.6 and 1.9 percent respectively following a strong rally in the previous session on news they were looking to move their bases out of Barcelona.
Sabadell and Caixa have the biggest exposure among top Spanish banks to private sector loans in the wealthy Catalonia region, while Banco Santander SA and Unicaja SA have the lowest.
Italian banks continued to suffer from plans by the European Central Bank to ask lenders to set aside more cash to cover newly classified bad loans.
Germany’s DAX on Friday slipped 0.1 percent. Earlier in the session the index edged up to a fresh record high, helped by strong industrial orders data.
The UK’s FTSE rose 0.2 percent after British Prime Minister Theresa May said she would stay on as leader to provide stability as the country enters a crucial stage in Brexit talks.
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