European shares jump as Italy reaches government deal

European shares breathed a sigh of relief on Friday, with Italian stocks supported after a deal to form a coalition government there ended three months of political deadlock and removed the risk of another general election.

The pan-European Stoxx 600 index rose 1 per cent, while German stocks gained 0.9 per cent and Britain's FTSE 100 rose 0.3 per cent. Italian stocks rallied as much as 2.9 per cent, the standout performers in Europe.

DUBLIN

The Iseq rose 41 points to 7,182, slightly underperforming to the rise experienced across Europe. CRH rose marginally to €31.77, holding on to Thursday's gains, which were triggered by the news that it was open to offers for its European distribution business and that it would have the capacity to spend €7 billion over the next four years.

Food group Glanbia fell marginally after it named Martin Keane as new group chairman and reduced the number of co-op directors on the board of the plc, closing the session at €15.78.

European shares up as Italy and Spain get new governments

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Ocado plays Ftse while Marks & Spencer flirts with danger

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Italian stocks rebound and lift European equities

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CRH lifts Iseq as European shares rattled by metal tariffs

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Paper and packaging giant Smurfit Kappa was up nearly 1 per cent at €35.70. The company's shares hit a record high earlier in the week as US giant International Paper continues its pursuit of the Irish firm.

AIB finished the session up nearly 4 per cent at €4.85 in line with other European financials while rival Bank of Ireland rose 2.6 per cent at €7.26,

LONDON

Britain’s top share index rose as shares in cyclical stocks such as miners and financials rallied, joining in broader gains for European stocks as relief over Italy’s political crisis lifted risky assets. British blue chips managed to escape the wider market sell-off relatively unscathed, posting a gain of 2.2 per cent in May, the best-performing European market thanks to its heavy weighting in large, international stocks such as miners and oil majors.

On the day, a rise in shares of banks Barclays, HSBC and Lloyds saw financials contribute the biggest boost to the FTSE. Mining stocks were also higher, with shares in Glencore, Rio Tinto and Anglo American up 1.2 per cent to 2.7 per cent, while oil majors BP and Royal Dutch Shell edged up as crude oil prices clawed back losses.

EUROPE

Shares in Italian banks Banco BPM, BPER, UBI and Intesa Sanpaolo were among the biggest risers on the STOXX, up between 3.3 per cent to 8.5 per cent after sustaining heavy losses in the previous month.

However, some market watchers remained cautious given that Italy’s anti-establishment parties, the League and Five-Star Movement, are planning to spend big.

Italian shares ended off highs, weighed down by a Reuters report that EU politicians from the two parties forming its new government backed a rejected proposal to set up funds to help countries quit the euro. A trader at a European bank said the decline was also triggered by technical factors and a 4.5 per cent slump in Fiat Chrysler shares. Fiat Chysler's departing boss Sergio Marchionne delivered a plan to ramp up sport utility vehicles and invest €9 billion in electric and hybrid cars in an attempt to double operating profit by 2022. Some investors who had expected news about possible spin-offs were disappointed.

Elsewhere Spanish equities rose 1.8 per cent after Spanish socialist Pedro Sanchez was catapulted to power, taking over as prime minister from veteran conservative Mariano Rajoy who lost a no-confidence vote in the wake of a corruption scandal.

NEW YORK

US stocks rose after the latest monthly jobs report pointed to strength in the world's largest economy and cemented expectations of at least two more rate hikes by the Federal Reserve this year.

Technology stocks led the rally, with gains in behemoths such as Apple, Microsoft and Alphabet lifting the S&P tech index to a record high.

"Tech isn't in the headlines as groups that are going to be impacted by what's going on with regards to tariffs in the EU, whereas others are," said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta which holds shares in the so-called FAANG stocks. – Additional reporting by Reuters