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Europe shares rally for second day on economy hopes

Europe shares rally for second day on economy hopes
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First Published: Wed, Oct 06 2010. 03 17 PM IST
Updated: Wed, Oct 06 2010. 03 17 PM IST
London: European shares rose in early trade on Wednesday, tracking gains in Asia and on Wall Street, with stock markets worldwide moving higher on hopes central banks will do more to boost struggling economies.
At 1:53am, the FTSEurofirst 300 index of top European shares was up 0.7% at 1,073.33 points, after rising 1.4% in the previous session, as US data on the services sector helped ease some concerns over growth prospects.
The two-day rally follows six straight sessions of decline, the longest losing streak since January 2009. The European benchmark is up more than 66% from its lifetime low of March 9, 2009, but has gained less than 3% in 2010. A stimulus pledge from the Bank of Japan to lift the economy also reassured investors on Tuesday.
Policymakers in the United States and Britain may further boost markets by more quantitative easing, analysts said. However, the Bank of England is not expected to unveil extra measures when it announces its interest rate decision on Thursday. The European Central Bank will also decides on rates on Thursday.
“The market is looking glass half full, rather than glass half empty,” said Justin Urquhart Stewart, director at Seven Investment Management. “It’s ignoring some of the negative ISM figures. And the bigger concern is the trade issue between Europe and China, and the currencies.”
Countries risk undermining the global economic recovery if they use their currencies to try to boost domestic growth, the head of the International Monetary Fund warned on Tuesday in a newspaper interview.
In a broad market rally, miners were among the biggest gainers as gold hit a record high, and copper prices hit a two-year high, boosted in part by a weaker dollar.
Anglo American, Antofagasta, Kazakhmys and Xstrata rose between 2.6 and 2.9%.
BANK BOOST
The heavyweight banking sector also helped to boost the index. Banco Santander, Deutsche Bank and UBS rose between 1.3 and 1.7%. Across Europe, Britain’s FTSE 100, Germany’s DAX and France’s CAC40 rose between 0.6 and 0.7%.
The Euro STOXX 50, the euro zone’s blue chip index, rose 0.8% to 2,781.76 points, moving further above a key resistance level, the 50% retracement of the index’s fall from a peak in April to a low in May.
Budget airline EasyJet rose 8.8% after saying it expected to beat its profit expectations for the year following a strong performance over the summer.
Spain’s Ferrovial rose 4.4% after selling a 10% stake in the 407 Express Toll Route in Canada for C$894 million ($876 million) to the Canada Pension Plan Investment Board.
Later in the session, investors’ attention will turn to the ADP Employment report in the United States, which may give some indication of the all-important payrolls report on Friday.
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First Published: Wed, Oct 06 2010. 03 17 PM IST
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