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European shares hit 6-week high on trade relief, stimulus hope

European shares hit six-week highs on Wednesday, supported by easing US-China trade tensions and hopes of fresh stimulus

Sep 11 2019

European shares hit six-week highs on Wednesday, supported by easing US-China trade tensions and hopes of fresh stimulus from the European Central Bank, while news from individual companies played into the upbeat mood.

Shares of London Stock Exchange hit a record high after Hong Kong Exchanges and Clearing made an unsolicited $39 billion takeover approach, but wanted LSE to ditch its acquisition of data company Refinitiv.

LSE's shares pared early gains, but closed up about 6%, its biggest percentage gain since the company agreed to buy Refinitiv in a $27 billion deal on Aug. 1.

Meanwhile, chipmakers including Infineon, Dialog Semiconductor, Siltronic and AMS gained between 1.8% and 3% after Apple Inc unveiled three new iPhones on Tuesday.

Shares in Prosus, a spin-off from Naspers that includes the e-commerce group's 31% stake in Chinese tech giant Tencent, surged more than 25% on their stock market debut in Amsterdam, creating one of Europe's largest internet companies.

Europe's tech index gained 1.2%, while the financial services index rose 1.5%, led by LSE.

Gains were broad-based, however, with all subsectors barring oil and gas companies finishing higher.

Investors have been piling into sectors that have lagged broader markets in the past days, driving the banking index  higher for the sixth straight session.

All eyes are now on the ECB's monetary policy meeting on Thursday, where it is expected to cut interest rates and restart an asset purchase programme at a time when the euro zone's biggest economy - Germany - might be slipping towards recession.

"Even if you're not going to be short (on markets), you're probably going to be cautiously long with the view of having more cash lined up, to buy into the market depending how dovish the ECB is," said David Madden, market analyst at CMC Markets.

Recent market moves have highlighted investors' doubt about how aggressive the central bank will be in providing stimulus, helping debt yields recover.

In the latest sign that trade tensions with the United States could be cooling, China's finance ministry said 16 types of US goods would be exempted from additional retaliatory tariffs effective Sept. 17.

Germany's trade-sensitive DAX rose 0.74%, while the pan-European STOXX 600 index gained 0.9% to hit its highest since July 30.

London-listed blue-chips outperformed European peers, with mid-caps getting an extra boost from receding risks of Britain crashing out the European Union without a divorce deal, at least for now.

All of the major European indexes have recouped losses sustained in a rough August, with the STOXX 600 up about 8% since touching a low of 361.07 last month.

Zara owner Inditex fell about 4% and was among the biggest decliners on the pan-regional benchmark after it reported weaker-than-expected growth in profit margins in the first half of the year.

Shares of Remy Cointreau gained 3.7% after Bloomberg reported the French spirits group was preparing to name Richemont's Eric Vallat as its new chief executive officer.