European stocks rise on bargain-hunting, erase weekly losses
(Reuters) – European stocks jumped more than 1% on Friday, posting their best session in two months and erasing all of this week’s losses, as investors sought bargains after one of the worst sell-offs this year on global economic recovery worries.
The pan-European STOXX 600 index gained 1.3%, with sectors that took a hit earlier this week such as automakers and miners surging 4% and 3.4%, respectively. The mining sector marked its best session in two months.
French stocks rose by the most in four months, advancing 2.1% and leading gains among major European bourses.
Banks were up 2.4%, but were the hardest hit this week as government bond yields dropped. [GVD/EUR]
A fresh surge in COVID-19 cases and underwhelming U.S. and Chinese economic data raised concerns about the strength of the recovery, boosting bonds and sending the benchmark STOXX 600 1.1% lower on the week until Friday’s gains negated those losses.
But with France saying the highly contagious Delta variant of COVID-19 will probably account for most new coronavirus cases in the country from this weekend, and Spain’s tourism hotspots asking the government to bring back curfews, the path out of a pandemic-induced economic slump still looks challenging.
“This sort of angst is nothing new for markets. However, the slide in yields is telling us that the recovery is either in trouble, or merely being delayed,” CMC Markets’ Michael Hewson said in a note.
“Much is likely to depend on the vaccine rollout plans, and the speed with which it can be rolled out in the countries where cases are rising sharply.”
UK airlines such as British Airways-owner IAG, easyJet and Ryanair rose between 0.5% and 1.9%, as Britain planned to scrap quarantine for fully-vaccinated arrivals from other countries in the coming weeks.
Data released earlier showed UK’s post-lockdown economic rebound slowed sharply in May despite an easing of COVID-related restrictions.
French planemaker Airbus gained 3.4% after it reported a 52% jump in deliveries in the first half of the year.
British luxury goods group Burberry rose 3.8% after Goldman Sachs upgraded the stock to “buy”, while Italian rival Salvatore Ferragamo slipped 0.7% after the U.S. bank downgraded it to “sell”.
Investors will now turn their focus to the earnings season, which kicks off in earnest next week. The bulk of the European companies are expected to report later this month, with analysts forecasting a near-109% surge in second-quarter profit for STOXX 600 companies, according to Refinitiv IBES data.
Graphic: European stocks YTD –
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