LONDON: European shares rose to fresh seven-year highs on Friday, extending a two-month rally fuelled by the European Central Bank's money printing programme which starts in the coming weeks.
European shares bucked a softer trend in Asian and US markets as a sharp overnight pullback in crude oil prices dampened risk appetite there. Brent crude was up 1.24 percent on Friday.
The FTS Euro first 300 index of top European shares was up 0.3 percent at 1,561.60 points, with strong annual results from Airbus Group, the world's second-largest aerospace company, spurring the rally.
About two-thirds of the way into Europe's earnings season, 55 percent of companies have met or beaten profit forecasts. Overall, fourth-quarter earnings are expected to grow by 19.5 percent, according to Thomson Reuters I/B/E/S, which would be Europe's best season in 3-1/2 years.
"The rally in stocks is so strong that we could see a capitulation of the shorts at some point, which would push the market even higher. Clearly some indexes have reached frothy valuation levels, but we're still long in the short term," said Mirabaud Securities senior equity sales trader John Plassard in Geneva.
The FTS Euro first 300 index is up 14 percent so far this year as the prospect of the ECB's quantitative easing programme drove core European bond yields into or close to negative territory pushing investors into higher-yielding assets such as equities.
Euro zone inflation data for February due at 1300 is expected to underline the ECB's Jan. 22 decision to embark on a 60 billion euro monthly securities buying programme to fend off deflation and revive the euro zone economy.
European government bond yields held near record lows before the data expected to show consumer prices fell 0.5 percent in February.
"Stimulus seems to be working a treat for some of the key markets around the world, including Japan and the euro zone. Recent data out of Europe has also been showing some positive signs and this has really encouraged investors to drive equities higher," Stan Shamu, market strategist at IG in Melbourne.
Asian equities mostly retreated from multi-year highs after falls on Wall Street overnight, with the MSCI's broadest index of Asia-Pacific shares outside Japan down 0.1 percent after advancing to a five-month high on Wednesday.
Strong factory output data and a weaker yen pushed Tokyo's Nikkei to a fresh 15-year high but the market was last flat as profit taking kicked in.
Comments
Comments are closed.