Euro zone shares rose on Friday, marking a third week of gains, as data showed factory activity this month jumped to a three-year high, while upbeat quarterly earnings boosted confidence in a broader economic recovery.
The pan-European STOXX 600 index rose 0.53 percent to 414.88, as regional factory activityreached a three-year high on strong demand for manufactured goods at home and overseas.
Another reading showed that the euro zone’s current account surplus widened in December last year on an increase in trade surplus and a narrower deficit in secondary income.
Still, the STOXX 600 marked a small gain of 0.21 percent for the week, having dropped for the past three sessions as investor concern grew over rising inflation and a rocky COVID-19 vaccine rollout.
However, basic resources stocks outpaced their peers this week with a 7 percent jump, as improving industrial activity across the globe drove up commodity prices.
“This week’s slightly adverse price action has all the hallmarks of a loss of momentum temporarily and not a structural turn,” OANDA senior market analyst Jeffrey Halley said.
“There is not a major central bank in the world thinking about taking their foot off the monetary spigot, except perhaps China. [Markets] will remain awash in zero percent central bank money through all of 2021 [and] a lot of that will head to the equity market,” Halley said.
Minutes of the European Central Bank’s meeting last month, which were released on Thursday, showed that policymakers expressed fresh concerns over the euro’s strength, but appeared relaxed over the recent rise in government bond yields.
The bank’s relaxed stance was justified by the eurozone economy requiring continued monetary and fiscal support, as evidenced by a contraction in the bloc’s dominant services industry this month.
The STOXX 600 has rebounded more than 50 percent since crashing to multiyear lows in March last year.
Hopes of a global economic rebound this year are also sparking demand for sectors such as energy, mining, banks and industrial goods.
London’s FTSE 100 on Friday lagged regional bourses due to a slump in January retail sales and as the pound jumped to its highest against the US dollar in nearly three years.
It rose 0.1 percent to 6,624.02, gaining 0.52 percent for the week.
French automaker Renault SA tumbled more than 4 percent after posting a record annual loss of 8 billion euros (US$9.69 billion), while food group Danone SA and German insurer Allianz SE rose following upbeat trading forecasts.
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