European shares rose on Thursday to a fresh three-month high as oil stocks rallied and online supermarket Ocado shot up after it signed a game-changing deal in the United States. The pan-European Stoxx 600 ended up 0.7 per cent, while Italy's benchmark index bounced 0.3 per cent following heavy losses in the previous session on concerns that a new government could relax fiscal discipline.
Italian stocks had tumbled more than 2 per cent on Wednesday after a leaked draft coalition programme indicated that the parties planned to ask the European Central Bank to forgive €250 billion of Italian debt. "We've got to keep a very close eye on the 5-Star Movement . . . and if they're going to try to put their foot down in any way," said Jasper Reimers, market analyst at Vertex Capital Group.
Dublin's Iseq rose 74 points to 7,801, reflecting positive market elsewhere in Europe. Index heavyweight PaddyPower Betfair rose 2.5 per cent to €96.20 despite the British government's decision to cut the top stake on betting terminals to £2, which promises to hit the bookmaker's UK business. However, reports that the company is in negotiations to merge its business with US fantasy sports group FanDuel as the US market opens up to traditional sports betting outweighed the negative UK news.
Ryanair was up nearly 2 per cent at €15.60 despite rising oil prices, which are a negative for the airline's fuel bill.
Drinks group C&C was up 1 per cent at €3.10 following full-year results earlier in the week. Bank of Ireland reversed the losses of the previous session, rising 1 per cent to €7.42, while rival AIB treaded water at €4.97. Permanent TSB was 1 per cent at €1.69.
Strong oil prices helped Britain's top share index seal its highest ever closing level on Thursday while online grocery retailer Ocado rocketed up 44 per cent after signing a deal with US grocer Kroger.
The FTSE 100 climbed 0.7 per cent to close at 7,787.97 points, just a whisker away from its record intraday high of 7,792.56 points hit in mid-January. The mid-cap FTSE 250 index hit a new record high, surpassing its previous mid-January record, up 0.9 per cent on the day. For both indices it marked a full recovery from the turmoil which had dented markets globally since January.
Heavyweights Royal Dutch Shell and BP drove the biggest gains, up 2.1 per cent and 1.4 per cent respectively as oil prices broke the $80 a barrel barrier.
The star of the session was Ocado, whose shares shot up as much as 81 per cent in intra-day trading before closing up 44 per cent after it announced that US retailer Kroger would use its technology.
Gambling stocks were initially bruised by the British government’s decision to cut the top stake on betting terminals to £2. But they ended the day higher as investors expressed relief the regulatory uncertainty was over, and looked instead to the potential benefits from a US court ruling which could lead to states legalising sports betting.
Ladbrokes Coral parent GVC and William Hill, which operate some of the 182,000 gaming machines in Britain, recovered to rise 5 per cent and 4.2 per cent respectively.
Netherlands-based telecoms group Altice jumped 12 per cent after its French unit showed the first signs of recovery in the first quarter, while French waste and water group Suez rose 3.1 per cent after higher waste volumes boosted its first-quarter core earnings. Shares in shipping group Maersk and broadcaster RTL fell between 7.1 and 8.9 per cent after giving updates.
Overall, European earnings have seen decent growth in the first quarter, though not on a par with the US.
Energy and industrial stocks led Wall Street higher on Thursday and the small-cap Russell 2000 hit a record, even as a rise in US bond yields to fresh seven-year highs suggested more competition for equities and investors fretted over geopolitics.
The energy sector rose 1.41 per cent, giving the benchmark S&P 500 the biggest boost, as Brent crude hit $80 per barrel for the first time since November 2014 as renewed US sanctions threatened a fall in exports from Iran in an already tightening market.
Keeping the gains in check were Cisco's 2.8 per cent drop, the most on the Dow, after the company's forecast indicated its transition to a software-focused business was a work in progress. Walmart slipped 1.1 per cent, reversing premarket gains, after it said profit margins were under pressure, despite sales and earnings beating expectations. JC Penney tumbled 10.7 per cent after its same-store sales missed estimates and the company cut its full-year profit forecast. – Additional reporting by Reuters