Hopes of further quantitative easing provide modest boost for region
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — European stocks edged higher on Monday, with most sectors trading in positive territory, as expectations continued to build that the Federal Reserve and other central banks will step in to boost the economy.
The Stoxx Europe 600 index (ST:SXXP 262.40, +0.13, +0.05%) gained 0.1% to 262.62.
The U.K.’s FTSE 100 index (UK:UKX 5,659, +1.48, +0.03%) edged up 0.1% to 5,663.91 and the French CAC 40 index (FR:PX1 3,766, +2.49, +0.07%) (FR:PX1 3,766, +2.49, +0.07%) (FR:PX1 3,766, +2.49, +0.07%) added 0.2% at 3,771.01.
The German DAX 30 index (DX:DAX 6,293, +0.94, +0.02%) was up 0.1% at 6,299.97.
The gains followed a strong end to the week for Wall Street, where the Dow Jones Industrial Average (DJIA 11,006, +57.90, +0.53%) closed above 11,000 for the first time in five months.
“Friday’s disappointing employment data out of the U.S. added weight to calls for a fresh round of quantitative easing from the Fed,” said Chris Weston, research analyst at IG Index.
“The uncertainty of more cheap money being pumped into the system -- combined with the falling dollar -- is however continuing to pump resource prices,” he added.
Financial stocks were mostly higher. Standard Chartered (UK:STAN 1,854, +22.00, +1.20%) gained 1% in London and ING Group (NL:INGA 7.81, +0.03, +0.33%) was up 0.9% in Amsterdam.
French car maker Renault SA (FR:RNO 38.10, +0.37, +0.96%) climbed 1.5% as auto stocks also benefitted from hopes of further easing measures by central banks.
U.K. low-cost airline easyJet PLC (UK:EZJ 467.20, +15.60, +3.45%) was one of the biggest movers, rising 4.1% after the company said it has resolved a dispute with its biggest shareholders and the owner of its brand.
The new deal gives easyJet the right to use the name for 50 years in exchange for royalty payments of 0.25% of its revenue.
Shares of Nokia Corp. (NOK 10.83, +0.12, +1.12%) (FI:NOK1V 7.93, +0.18, +2.26%) rose 2.3% in Helsinki. The firm said it has started shipping the C7, its second smartphone based on the Symbian platform.
Broker downgrades weighed on several stocks, including U.K. telecommunications company BT Group PLC (UK:BT.A 145.40, -3.60, -2.42%) , which fell 1.9% after being cut to underperform from market-perform at Sanford C. Bernstein.
The firm said BT is now priced at a 15% premium to the sector, which implies either considerable operational outperformance or a sharp cut in future pension deficit payments, which Bernstein analysts said “stretch our imagination to breaking point.”
In the pharmaceutical sector, shares of Merck KGaA (DE:MRK 60.67, -0.79, -1.29%) dropped 1.3% after the company said it plans to appeal against a negative opinion from a European committee over the use of its Cladribine drug for relapsing multiple sclerosis.
Analysts at Societe Generale said when the panel’s decision was announced last month that they though an appeal would be unlikely to succeed.
Insurer Prudential (UK:PRU 624.00, -12.50, -1.96%) fell 1.7% in London after it was downgraded to underweight from neutral at J.P. Morgan, which cited the firm's valuation.
