London: European equities climbed on Thursday ahead of rate decisions from the Bank of England and the European Central bank, with banks and drugmakers gaining ground and oil shares rising on the back of higher crude prices.
At 1:52pm, the FTSEurofirst 300 index of top European shares was up 0.5% at 872.74 points after slipping more than 2% in the previous session. The index, which slumped 45% in 2008, has jumped 35% since falling to a lifetime low in early March.
Energy stocks were among top gainers as they tracked crude oil prices, which rose 1.3%. BP, Royal Dutch Shell, Tullow Oil, Repsol, Total and StatoilHydro added 0.1-1.6%.
Financial stocks also advanced, with Barclays, Lloyds, Royal Bank of Scotland, UBS and Swedbank rising 1.1-6.3%.
Investors awaited interest rate decisions later in the day and were avoiding big trading moves, analysts said.
“Investors will look quite closely at the details, but this is not a big deal to drive the markets in any direction as no big decisions are awaited. The markets will be torn between positive equity news and profit-taking,” said Franz Wenzel, strategist at AXA Investment Managers, in Paris.
“The market will remain shaky. After a decent performance for three months in a row, people are getting tempted to take some profits despite the fact that we are seeing more and more green shoots,” he added.
The European Central Bank is set to keep interest rates on hold on Thursday with markets keen to see the details of its covered bond purchase plan as well as clues on whether rates may yet be cut further.
The Bank of England is also expected to keep interest rates at a record low 0.5% and refrain from expanding its quantitative easing plan.
Across Europe, the FTSE 100 index, Germany’s DAX and France’s CAC 40 were up 0.6-1.1%.
In the last few days, the FTSEurofirst 300 index has tested and held technical support on the bottom of its uptrend channel extending back to early March, now at 872 points. The top of the channel is currently at 945 points.
It faces resistance at the January peak of 895 and technical analysts said the market might struggle in the near term.
“There is not much room left on the upside for stocks,” said Alexandre Le Drogoff, technical analyst at Aurel-BGC.
“The DJ Stoxx 600 is stuck around its 200-day moving average, and it’s getting more and more difficult to break out from this zone as people are getting cautious again and prone to take profits,” he said.
Pharmaceutical shares, often seen as defensives, gained ground. AstraZeneca, GlaxoSmithKline, Novartis and Sanofi-Aventis were up 0.9-1.9%.
But miners were broadly lower. BHP Billiton, Anglo American , Antofagasta and Eurasian Natural Resources fell 0.5-1.7%.
Rio Tinto was down 0.8%. Sources said that Chinese state-owned metals firm Chinalco may revise its planned $19.5 billion investment in Rio before a 14 June deadline to avoid further delays in Australian government approval.
EADS rose 2% after the Wall Street Journal said that UAL Corp’s United Airlines has asked Boeing Co and EADS’s Airbus to propose competing bids for up to 150 new airliners. The deal could be worth more than $10 billion for the two aircraft makers, the paper said.
Fiat rose 0.8%. Italian Prime Minister Silvio Berlusconi said on Wednesday his government would be willing to intervene with Germany to support Fiat’s bid for Opel if the Italian car maker were to ask for it.