European stocks closed broadly higher on Thursday, extending gains to a fourth session, with investors picking up shares on hopes of economic recovery gathering pace due to a pickup in vaccination drive.
Optimism about additional economic stimulus in the U.S., and news about former European Central Bank chief Mario Draghi agreeing to help form a new Italian government contributed as well to the positive mood in the markets.
The Bank of England’s nine-member monetary policy committee headed by Governor Andrew Bailey voted to hold the interest rate at 0.1% and the quantitative easing at GBP 895 billion.
On negative interest rate, the MPC said it did not wish to send any signal that it intended to set a negative Bank Rate at some point in the future. It concluded overall that it would be appropriate to start the preparations to provide the capability to do so if necessary in the future.
Bank of England expects the UK economy to fall by around 4% in the first quarter of 2021, in contrast to expectations of a rise in the November Report. The bank lowered its forecast for the British economic growth for this year to 5% from 7.25% projected in November.
The Pan European Stoxx 600 climbed 0.56%. Germany’s DAX ended up 0.91%, France’s CAC 40 gained 0.82%, the U.K.’s FTSE 100 edged down 0.06% and Switzerland’s SMI surged up 0.79%.
Among other markets in Europe, Austria, Belgium, Finland, Iceland, Ireland, Norway, Russia, Spain and Sweden ended on firm note.
Czech Republic and Turkey edged up marginally and Netherlands closed flat, while Denmark, Greece, Poland and Portugal ended weak.
In the UK market, Lloyds Banking Group and Natwest Group moved up 5.65% and 5.5%, respectively. Compass Group, Whitbread, IAG, Ashtead Group, IHG, Barclays Group, ICP, JD Sports Fashion, Rolls-Royce Holdings and HSBC Holdings gained 2 to 4.5%.
Barratt Developments gained about 2.4% after achieving “a fantastic first half performance,” according to its Chief Executive.
Consumer goods giant Unilever slumped more than 6% after its underlying sales rose 3.5% in the fourth quarter in line with estimates.
Fresnillo, BT Group, Just Eat Takeaway, United Utilities, Polymetal International, Imperial Brands and Royal Dutch Shell also declined sharply.
In the German market, Bayer ended on a strong note after announcing a formal agreement with plaintiffs’ class counsel on a class plan designed to manage and resolve future Roundup cases.
MTU Aero Engines, Munich RE, Daimler, Continental, Allianz and SAP rose sharply, while BMW, Volkswagen, HeidelbergCement and RWE ended moderately lower.
Infineon Technologies ended weak despite reporting higher revenue and net profit for the first quarter of fiscal 2021. Deutsche Bank edged down marginally despite the lender reporting a small annual profit in 2020, its first since 2014, on higher revenues and cost reductions at its investment banking division.
In the French market, TechnipFMC shares moved up more than 3%after the company announced the timing and details regarding its previously announced separation into two industry-leading, independent, publicly traded companies.
Dassault Systemes, Accor, Safran, Airbus Group, Essilor, Societe Generale, Thales, Renault, Capgemini and Publicis Groupe also ended with strong gains.
In economic releases, Eurozone retail sales grew 2% month-on-month in December, in contrast to a fall of 5.7% in November, data from Eurostat revealed. Sales were forecast to grow 1.6%.
The construction Purchasing Managers’ Index for Germany fell to 46.6 in January from 47.1 in December due to a sustained downturn in work on commercial building projects.
French business managers forecast a strong rebound in investment expenditure this year, according to a survey, released by the statistical office Insee.
Managers forecast investment expenditure to rise 10% this year, reversing an estimated decline of 13% in 2020. Managers upgraded their forecast for 2021 by 6 points and that for 2020 by 1 point.
UK construction activity declined in January for the first time in eight months amid weakness in commercial activity and house building. The CIPS UK Construction purchasing managers’ index eased to 49.2 from 54.6 in December, survey data from IHS Markit showed Thursday. Economists had expected a score of 52.9.
A report from the Society of Motor Manufacturers and Traders said UK car sales declined sharply in January as showrooms across the country remained shut. The report said car sales fell 39.5% year-on-year to 90,249 units in January.
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