European stocks posted their best weekly performance since early April on Friday, aided by strong gains in Paris, against a backdrop of hope among investors that central banks would support global growth with more accommodative policies. The Bundesbank slashed its growth projections for Germany and euro zone money markets now price in a 60% chance of the European Central Bank cutting interest rates by 10 basis points by year-end, while US job growth slowed sharply in May, feeding expectations of lower US interest rates in 2019.
The pan-European STOXX 600 gained 0.9%, with Paris-traded stocks posting a 1.6% gain. Frankfurt-listed shares rose 0.8%, while their peers in London firmed 1%. "Investors continue to pile into equities, with the jobs report and subsequent stock rally capping a very good week for equity markets," Chris Beauchamp, chief market analyst at IG, wrote in a note.
Sanofi tacked on 4.4% to prop up the French index and European health care stocks, on news it has poached Paul Hudson from Novartis to become its new chief executive later this year. The STOXX 600's top performer was Dutch insurer ASR Nederland with a 5.8% rise, after rival Vivat, for which ASR previously made an offer, agreed to be bought by private European life insurer Athora.
Technology shares, broadly sensitive to trade war ructions, starred with a 2% gain. Chinese President Xi Jinping on Friday called US President Donald Trump his friend and said he believed the United States was not interested in rupturing economic ties with China. The chemicals sector was among Europe's top performers, rising 1.1%. Belgian chemical and materials maker Solvay gained 2.3%, aided by UBS upgrading its rating on the stock and boosting its target price.
While higher Brent crude futures fuelled energy shares' 1.2% rise, Polskie Gornictwo Naftowe i Gazownictwo SA led the sector with a 3.5% gain. A unit of the Polish firm bought a stake in the Norwegian King Lear deposit from Total E&P Norge. Financial services rose 0.8%, with the sector's gains led by Exor, which added 1.6%. The Milan-listed firm is the top shareholder in Fiat Chrysler Automobiles, which pulled away from an offer to merge with Renault earlier this week.
Automakers and their suppliers gained 0.1%, as a 4.9% fall in German car parts maker Hella following a rating downgrade by brokerage BHF weighed. Real estate stocks dipped 0.6%, making them the STOXX 600's only losing sub-sector. Deutsche Wohnen slid 8.5% after Morgan Stanley downgraded its rating on the German property group to "equal weight" from "overweight". The bank cited the risk of rising political involvement in the German residential market. The Berlin Senate proposed earlier this week to impose a five-year rent freeze from January 2020.
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