London: European stocks rose in early trade on Friday, gaining ground for a fourth day in a row, on easing fears over banks and after signs of stabilisation in US consumer spending that fuelled a sharp rise on Wall Street.
Banking and insurance stocks led the rally, after US lender Citigroup said the bank does not need any more emergency cash from the government and expects to stay private, while rival Bank of America said it was profitable in January and February, calming worries over the faith of the two stricken banks and the financial system in general.
FTEU3 index of top European shares was up 1.8% at 709.34 points. The index has gained 10% since hitting an all-time low on 9 March, but is still down 14.7% this year, hit by the rapidly escalating global economic downturn.
“The technical rebound we have seen over the past few days could soon be over as people will be keen to book profits,” said Alexandre Le Drogoff, technical analyst at Aurel BGC.
Banks and insurers, which had been the most hammered stocks so far this year, led the rally on Friday, with Societe Generale up 6.3%, Credit Suisse up 8.2%, Barclays up 7.9% and AXA up 2%.
Despite the recent rebound, the DJ Stoxx bank and insurance indexes are still down 26% and 34% respectively in 2009.
Mining shares, which have shown resilience so far this year, were also surging on Friday, gaining ground along with metal prices on hopes over the outlook for the Chinese economy, fuelled by comments from Chinese Premier Wen Jiabao.
Wen held out the prospect of extra stimulus spending if needed to hit China’s 8% growth goal this year.
Around Europe, UK’s FTSE 100 index .FTSE was up 1.7%, Germany’s DAX index up 1.4%, and France’s FCHI up 1.9%.
French telecoms equipment maker Alcatel-Lucent rose 12% after its financial head told French daily Les Echos the firm is aiming to achieve a net profit most likely in the second half of 2010.
US stocks sharply rose on Thursday, after helped by data showing sales at US retailers fell by a smaller-than-expected margin in February after a surprise gain the prior month.
But despite the market’s recent rally and better-than-feared data, analysts remain worried about the prospect for economic growth and corporate profits in the years to come.
Investors will keep an eye on the G-20 meeting over the weekend, hoping for more coordinated action to tackle the global economic slowdown.
Washington is urging the biggest industrialised countries to spend 2% of their gross domestic product to boost demand and pull the global economy out of its tailspin, but France and Germany have rejected US and British calls for fresh spending.