European shares advance on trade hopes and ECB talk of banks boost

Iseq extends rally as it edges upwards

Insurer FBD was in demand, advancing 2.9 per cent to €8.50. Photograph: Dave Meehan

Insurer FBD was in demand, advancing 2.9 per cent to €8.50. Photograph: Dave Meehan

 

European shares advanced on Friday to their highest level in three months, as investors cheered reports of progress in US-China trade talks and as a European Central Bank executive board member stoked hopes of a new plan to help euro zone banks.

The pan-European Stoxx 600 index rallied by 1.4 per cent.

Dublin

The Iseq index edged 0.3 per cent higher on Friday, extending its rally for the year to date to almost 9 per cent.

Bank of Ireland rose 2.6 per cent to €5.47, AIB edged 0.5 per cent higher to €3.87 and Permanent TSB inched 0.4 per cent ahead to €1.54, as sector followers cheered comments from ECB board member Benoît Cœuré that a new round of cheap multi-year loans to banks – known as TLTROs – is “possible”.

Insurer FBD was also in demand, advancing 2.9 per cent to €8.50, amid rising hopes that Irish judges will agree to a Government request to set up a committee to set guidelines for personal injury awards in order to reduce inconsistencies in court rulings.

Bucking the trend, fuel forecourt retailer Applegreen lost 3.3 per cent to €5.80, while Smurfit Kappa dipped 1.6 per cent to €26.58.

London

Britain’s Ftse 100 rose for a fifth straight session and posted its third straight week of gains amid a broader rally in global markets on Friday on news of progress in the Sino-US trade talks.

The Ftse 100 added 0.6 per cent, with investors seeing little change in the Brexit backdrop after prime minister Theresa May’s latest defeat in parliament on Thursday.

Royal Bank of Scotland added 2.4 per cent after announcing a better-than-expected dividend and reporting a more than doubling of 2018 profit.

Standard Life Aberdeen slumped 6 per cent on its worst day in a year after a discounted share offering.

On the Ftse 250, shares in Plus500, which lost nearly one-third of its value this week following a profit warning, tumbled after the Times newspaper reported that the company may not have informed investors about a $103 million hit from client trading in 2017.

Europe

The trade-sensitive German index jumped 1.9 per cent as investors globally welcomed a Chinese state news agency Xinhua report that China and the United States had reached a consensus in principle on some key issues during trade talks in Beijing.

Combined with Chinese president Xi Jinping saying talks would continue in Washington next week, that gave the market another leg up after US treasury secretary Stephen Mnuchin said talks had been “productive”.

Mining stocks jumped 1.95 per cent to a four-month high, and China-sensitive auto stocks rose 2.1 per cent, a big reversal from early losses after weak European car sales data.

Bank stocks were also top movers, with the index climbing 2.75 per cent amid hopes of a new round of TLTROs to boost ailing euro-zone lenders, particularly in Italy, that could face a funding cliff-edge next year when previous loans must be repaid. Italian banks rose 2.8 per cent to a two-month high after the comments.

French media giant Vivendi climbed 5.6 per cent after reporting strong results for its Universal Music Group arm, and confirming it would soon select financial advisers to sell a stake of up to 50 per cent in UMG.

New York

Progress in the US-China trade talks pushed the Dow Jones Industrial Average 1.41 per cent higher in early afternoon trading on Wall Street. The S&P 500 gained 0.9 per cent, and the Nasdaq Composite added 0.5 per cent.

Hopes of a trade deal ahead of a March 1st deadline have helped the trade-sensitive industrial sector gain nearly 17 per cent so far this year, making it the best performing S&P sector.

The sector rose on Friday, boosted by bellwethers Boeing and Caterpillar.

Another concern was Trump saying he would declare a national emergency in an attempt to fund his US-Mexico border wall without congressional approval.

“The ramifications of a national emergency might be very difficult for everyone to understand,” said Art Hogan, chief market strategist at National Securities in New York. “The use of a national emergency for an issue like this is brand new.”

Despite the threat of a national emergency, all 11 major S&P sectors were trading higher in early afternoon trading. – Additional reporting, Reuters.