European shares edge higher as energy supply worries ease

European shares notched up their best week in two months on Friday as concerns over an energy supply crunch eased, bringing some calm to investors worried about a big rise in interest rates and a political crisis in Italy.

While Russian gas flows to Europe resumed after a scheduled maintenance outage, market participants fretted as euro zone business activity unexpectedly shrank in July, due to a downturn in manufacturing and a near-stalling of service sector growth.

The data came a day after the European Central Bank (ECB) delivered an aggressive 50-basis point rate hike, its first increase by in 11 years to combat soaring inflation.

Dublin

The Iseq closed 1 per cent higher, posting a more convincing gain than those seen on the major European indices. The Irish market was driven upwards by a 2.6 per cent gain for Ryanair, which closed at €12.88, and a 1.9 per cent rise for food group Kerry, which finished at just under €99.96.

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Flutter Entertainment advanced 3.2 per cent to €97.02, while Glenveagh Properties rose 1.55 per cent to €1.05 and index heavyweight CRH added 1 per cent to €35.28.

But AIB fell 1.2 per cent to €2.15 and Bank of Ireland slid 3.3 per cent to €5.74 on a weak day for banking stocks across Europe amid fears of a global economic slowdown, a day after the ECB raised interest rates by a more-than-expected 50 basis points.

Packaging group Smurfit Kappa was another faller, declining 3.8 per cent to €32.26.

London

Britain’s domestically focused FTSE 250 index outperformed the blue-chip FTSE 100 for its third straight week on Friday, with insurer Beazley topping the mid-cap index following a strong annual forecast.

The commodity-heavy FTSE 100 edged 0.1 per cent higher and ended the week 1.8 per cent higher. Oil major Shell climbed 0.5 per cent as investors returned to riskier assets following a brutal sell-off. Capping gains on the blue-chip index, banks fell 1.2 per cent.

The mid-cap FTSE 250 rose 0.6 per cent, ending the week 5.2 per cent higher, helped by strong earnings updates.

Beazley jumped 9.4 per cent as the insurer raised its full-year profitability forecast on an increase in cyber risk premiums. But Aston Martin fell 8.7 per cent as analysts at Jefferies cuts its price target after the luxury carmaker raised funds last week.

Europe

The pan-European Stoxx 600 index closed 0.3 per cent up at its highest level since June 10th, while for the week it jumped nearly 2.9 per cent.

In Frankfurt, the Dax nudged up just 0.5 per cent, while the Cac 40 in Paris rose 0.25 per cent.

Gains on Friday were led by sectors that are more resilient to uncertainty such as real estate, up 4.3 per cent, followed by utilities, and food and beverages stocks. Economy-linked stocks such as banks dropped 1.2 per cent, while rising oil prices lifted heavy-weight energy stocks 1.2 per cent. After a week of political turmoil, Italian shares inched up 0.1 per cent.

In earnings reports, Danske Bank fell 2.2 per cent as it axed dividends, while Swiss elevator and escalator manufacturer Schindler slipped 3.9 per cent after cutting 2022 revenue guidance. Aluminium-maker Norsk Hydro gained 6.4 per cent after proposing an extra dividend and offering share buybacks.

Uniper plunged 28.9 per cent after the German government stepped in to rescue the gas importer with a €15 billion bailout.

US

Wall Street stocks fell in early trading after dismal quarterly revenues from Twitter and Snap triggered declines in social media and ad tech firms, countering gains in American Express following an upbeat forecast.

By early afternoon, Snap’s shares plunged nearly 40 per cent, after the Snapchat owner missed revenue targets and declined to make a forecast on Thursday, while Twitter slipped 1.2 per cent following a surprise fall in revenue.

Additional reporting: Reuters