European shares on Friday marked their biggest weekly gain this year, as signals from Russian President Vladimir Putin about a positive shift in talks with Ukraine helped markets end a volatile week on firmer footing.
The pan-European STOXX 600 index closed 0.95 percent higher at 431.17, and snapped three weeks of losses, adding 2.23 percent on the week as stellar gains for beaten down stocks outweighed declines from worries over the fallout from the Russia-Ukraine war.
Putin said that there had been some progress and “positive shifts” in Moscow’s talks with Ukraine, without elaborating, immediately lifting investor sentiment.
“Investors might find that trying to build a rally on comments from Vladimir Putin is a bit of a fool’s errand, but that has been the theme of the day,” IG chief market analyst Chris Beauchamp said.
The German DAX surged 1.38 percent at 13,628.11, logging its best week in a year with an increase of 4.07 percent.
“European markets, like the DAX, already were pricing quite a big profit hit,” BCA Research chief strategist Dhaval Joshi said.
“So any sort of positive news gives a sharp reversal, because there’s already quite a lot of bad news priced in,” he said, adding that markets are not fully pricing in second-round effects, such as the cutting off of important exports from Ukraine like agricultural exports.
Britain’s FTSE 100 rose 0.8 percent to 7,155.64, bolstered by data that showed a strong rebound in the economy.
It was up 2.41 percent on the week, posting its biggest weekly gain in three months with financial stocks and industrial miners leading gains, while data showing an improving UK economy bolstered the case for a Bank of England rate hike next week.
The European Central Bank on Thursday paved the way for an interest rate hike as soaring inflation outweighed concerns about the fallout from Russia’s invasion of Ukraine.
Eurozone banks recovered 4.5 percent this week, posting their best week in two months, after dropping nearly 19 percent last week due to their large exposure to Russia.
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