European stocks rise on rate hopes as oil rebounds

LONDON: European stocks mostly rose on Thursday, lifted by hopes that the US Federal Reserve may be moderating its stance on interest rate rises, dealers said.

Oil rebounded from weakness seen in the European morning when the US benchmark WTI contract hit a 14-month low on expectations that OPEC may not agree meaningful caps on oil production at a meeting next week.

There was much market talk about what exactly to read into a speech by Fed chairman Jerome Powell late Wednesday, analysts said.

Many understood his remark that the Fed's rates were close to neutral to mean that there was now less need for rate hikes, a view that sparked a major rally in Wall Street indices Wednesday after the European close.

As key European indices played catch-up, the Dow index was lower in New York late morning deals, but still held on to most of the previous day's strong gains.

- 'Somewhat dovish' -

"European markets are moving higher after US equities were sharply higher and Fed Chairman Jerome Powell gave somewhat dovish remarks in New York yesterday," said analysts at Charles Schwab.

While the US central bank is still widely expected to lift rates, Powell's comment was a far cry from his characterisation last month of them being "a long way from neutral".

Investors meanwhile remain wary ahead of the weekend's crunch trade talks between US President Donald Trump and China counterpart Xi Jinping at the G20 summit in Buenos Aires.

The pound fell versus the dollar and euro one day after the UK government and Bank of England painted a bleak picture of the country's economic future following Brexit.

New York's West Texas Intermediate crude, one of the world's major oil contracts, slumped in morning deals to strike a near 14-month low.

- 'Pressure building' -

"The oil market is clearly not 100 percent convinced that the OPEC+ will cut supplies next week, but the pressure is certainly building as prices continue to fall amid ongoing concerns over excessive supply and lower demand growth," Forex.com analyst Fawad Razaqzada told AFP.

"With WTI hovering around the $50 mark, it has given up more than 50 percent of its gains made since hitting a low in 2016.

"This represents a significant drop for a healthy market, which makes intervention from the OPEC+ group even more likely," Razaqzada added.

Dealers said a report saying that Russia had started talking with Saudi Arabia about cutting production helped trigger Thursday's rebound.

- Key figures around 1640 GMT -

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London - FTSE 100: UP 0.5 percent at 7,038.95 points (close)

Frankfurt - DAX 30: FLAT at 11,298.23 (close)

Paris - CAC 40: UP 0.5 percent at 5,006.25 (close)

EURO STOXX 50: UP 0.2 percent at 3,174.16

New York - Dow Jones: DOWN 0.4 percent at 25,25.01

Tokyo - Nikkei 225: UP 0.4 percent at 22,262.60 (close)

Hong Kong - Hang Seng: DOWN 0.9 percent at 26,451.03 (close)

Shanghai - Composite: DOWN 1.3 percent at 2,567.44 (close)

Pound/dollar: DOWN at $1.2789 from $1.2825 at 2200 GMT

Euro/pound: UP at 89.00 pence from 88.63 pence

Euro/dollar: UP at $1.1379 from $1.1366

Dollar/yen: DOWN at 113.46 yen from 113.68

Oil - West Texas Intermediate: UP $1.15 at $51.44 per barrel

Oil - Brent Crude: UP 70 cents at $59.79