European shares were little changed on Friday, after uninspiring updates from Deutsche Bank AG and several Spanish lenders captured investors’ attention, given the absence of developments in US-China trade talks.
However, higher-than-forecast US payroll numbers provided a needed boost.
The pan-European STOXX 600 on Friday fell 1.02 points, or 0.3 percent, to 359.70, rising 0.5 percent from a close of 357.84 on Jan. 25.
The financial sector was full of news, with earnings from Deutsche Bank and Denmark’s Danske Bank A/S amid new regulatory scrutiny.
The German bank disappointed investors with an eighth consecutive decline in quarterly revenue.
European car and automotive parts stocks were among the biggest gainers after Morgan Stanley upgraded the region’s industry to “attractive.”
The European gauge was unable to sustain a move above its 100-day moving average, following the best month for the region’s equities in more than three years.
“‘Dead cat bounce’ or ‘every correction is a buying opportunity’? That is what all investors are trying to guess, as the bounce from Christmas lows has been very strong,” Finland-based FIM Asset Management Ltd chief strategist Lippo Suominen said.
“Earnings season has been good enough to remove the near-term worries of earnings recession,” Suominen said. “However, now quite a bit of hopes have been priced in and investor sentiment has risen. Thus going forward we are again more vulnerable to the news flow, which definitely will not be only positive.”
Britain’s FTSE 100 closed higher for the fourth straight session, while TalkTalk Telecom Group PLC sank after warning that rising costs would hit its earnings.
The FTSE 100 on Friday closed up 51.37 points, or 0.7 percent, to 7,020.22, posting its best week since December 2016 and surging 3.1 percent from 6,809.2 on Jan. 25.
Markets got a boost when US President Donald Trump said that he would meet Chinese President Xi Jinping (習近平) soon to try to seal a comprehensive trade deal and the top US negotiator reported “substantial progress” in two days of high-level talks.
“Though the details of what happens next are still unclear ... the overall tone from the January-ending trade talks was one of cautious optimism,” Spreadex analyst Connor Campbell said.
Data showing that China’s factory activity last month shrank by the most in almost three years kept gains muted early on, but a stronger-than-expected US job growth report for last month provided a shot-in-the-arm for Britain’s main index.
Domestic data signaled continuing concerns from Brexit uncertainty, as British factories last month stockpiled goods at the fastest rate since the early 1990s as they brace for a potentially chaotic divorce from the EU.
Banks and mining shares were among the biggest boosts to the FTSE 100, as the trade deal signals helped the sectors most sensitive to the global economy. US dollar-earners also gained as weak UK factory data pushed sterling lower.
Burberry Group PLC, among the most exposed to China, also rose 1.7 percent.
Gold prices fell as investors sought riskier assets, leading Fresnillo PLC down 3.4 percent to the bottom of the main index. It was one of only 12 blue-chip stocks in the red.
TalkTalk shares ended 4.7 percent lower after hitting a more than seven-month low as the broadband firm said that full-year earnings would fall short of expectations due to higher costs from attracting more customers and changing its accounting standard.
Glencore PLC edged 1.1 percent lower after Katanga Mining Ltd said that the Democratic Republic of the Congo asked it to suspend a project. Glencore owns a majority stake in Katanga.
Metro Bank PLC, whose stock has halved in value following an accounting error, jumped 10.4 percent on its best day since floating in March 2016 and was the best mid-cap performer.
Additional reporting by staff writer
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