European shares on Friday jumped to their highest level in six weeks as signs of a detente in a trade dispute between the US and China lifted markets.
The pan-European STOXX 600 on Friday jumped 6.3 points, 1.8 percent, to 357.04, jumping 2.2 percent from a close of 349.20 on Jan. 11.
Germany’s trade-sensitive DAX climbed 286.92, or 2.6 percent, to 11,205.54, surging 2.9 percent from 10,887.46 a week earlier, with industrials, tech and auto stocks the biggest drivers of gains across the region.
In London, the FTSE 100 on Friday gained 133.41 points, or 2 percent, to 6,968.33, rising 0.7 percent from a close of 6,918.18 on Jan. 11.
Markets rose overnight after a report that US Secretary of the Treasury Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback.
A Bloomberg report saying that China has offered to ramp up imports from the US in order to reconfigure trading relations between the two countries delivered an extra boost to equities on Friday.
The tech index led the way with a 3 percent surge, its strongest day since the middle of October last year taking it to a six-week high.
Chipmakers STMicroelectronics NV and AMS AG were among the top gainers.
The auto sector climbed 2.7 percent, bringing its year-to-date gains to 9 percent. Automaker shares have been hit by the US-China trade war, as well as threatened US tariffs on car imports from Europe.
Trade-sensitive industrial stocks Siemens AG and Airbus SE, as well as luxury shares Compagnie Financiere Richemont SA, Kering SA and LVMH Moet Hennessy Louis Vuitton SE, were among top boosts to the STOXX.
Europe’s banking sector recovered from the previous session’s losses when a profit warning by France’s Societe Generale SA hit the sector hard.
Among results on Friday was French supermarket retailer Casino Guichard-Perrachon SA, whose shares rose 6 percent as traders and analysts said that fourth-quarter sales had weathered “yellow vest” anti-government demonstrations in France.
“France has held up well, despite disruption from protests,” Jefferies Group LLC said in a research note.
Lab testing company Eurofins Scientific shot up 8.7 percent after Joh. Berenberg, Gossler & Co KG kept a “buy” on the stock, saying that negative views gained traction late last year, providing an opportunity.
Optimism also came from small-cap German online meal-kit delivery service HelloFresh SE, whose shares surged 21.5 percent after it raised its revenue forecast.
However, it was not all good news for European stocks.
Telecom Italia dropped 7.2 percent after it said that it expected to report full-year organic core earnings of about 8.1 billion euros (US$9.2 billion), a drop of less than 5 percent compared with the prior year.
Another profit warning by Ryanair, which blamed lower-than-expected winter fares to overcapacity, spooked investors, initially dragging the stock down.
By the close, shares in the budget airline were up 0.3 percent, underperforming the market, while rival EasyJet Airline Co Ltd also inched up 0.3 percent — one of the weakest FTSE 100 stocks.
“This announcement was not wholly unexpected, so we do not expect the shares to react by the full potential consensus net profit adjustment,” Citi analysts said.
Investors have been bracing for swings in European stocks as earnings test whether fears about slowing economic and corporate growth that punished equities in the past months are a reality.
Expectations are low.
Fourth-quarter earnings per share for STOXX 600 companies are expected to have grown by 6 percent, half the levels seen in the third and fourth quarters of 2017, Refinitiv’s institutional brokers estimate system showed.
Additional reporting by staff writer
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