By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets notched some
moderate gains on Monday, with Italian stocks rallying on relief
that a new government is finally in place.
Investors looking ahead to potential easing from the European
Central Bank. Earnings news drove Aberdeen Asset Manager PLC higher
and Aker Solutions ASA lower.
The Stoxx Europe 600 index rose 0.4% to 297.17, after closing up
3.7% last week, the biggest percentage gain since Nov. 23. The
index has been up two of the past three weeks. A higher opening for
U.S. markets also underpinned Europe markets.
Aberdeen Asset Management PLC surged 7% after the fund manager
posted a half-year rise in pretax profits and assets under
management. Aberdeen lifted its dividend 36% even as it said it
remains cautious on its outlook.
On the downside, Aker Solutions ASA shares slumped 22% after the
oilfield products and services group warned that earnings would
"considerably lag current consensus market estimates," owing to
cost overruns.
But away from earnings, analysts said Europe markets have been
cautiously gaining on expectations the European Central Bank will
cut interest rates later this week. The U.S. Federal Open Market
Committee also meets, though economists largely expect no change in
policy.
Italy's new government finally getting in place also helped
underpin markets Monday. Enrico Letta was sworn in as prime
minister on Sunday after a lengthy political deadlock, which
brought some sense of relief to markets.
"News from over the weekend that Italian PM Letta has formed a
new government has provided confidence to the markets," said Atif
Latif, director of trading, equities and derivatives at Guardian
Stockbrokers, in emailed comments.
Providing further fuel for the case for lower rates in Europe,
data showed economic confidence in the euro zone fell more than
expected in April. The European Commission said an index of
business and consumer sentiment fell to 88.6 from a revised 90.1 in
March.
Latif said markets also paid attention to soft six-state German
inflation data ahead of Thursday's ECB rate decision.
"The market has been within a tight range today. Still data
dependent but talks on central bank action may be tapered and at
the same time concern about continual stagnant growth in the
economy and how long this will remain for," he said.
Italian stocks were bid higher on Monday, with the FTSE MIB
Italy index were ahead of the pack Monday, with a 2% jump to
16,904.53, led by a 2.6% rise for UniCredit SpA. .
Yields at an Italian bond auction of notes maturing at 2023
earlier in the day dropped to their lowest level since October
2010.
Among other indices, the French CAC 40 index gained 1.4% to
3,862.66, led by a 1% rise for heavyweight Sanofi SA (SNY) and a
near-1% rise for BNP Paribas SA .
The German DAX 30 index pushed higher after an earlier slump,
gaining 0.7% to 7,866.59.
Analysts at J.P. Morgan Cazenove said the German DAX is unlikely
to outperform this year and the focus will shift to peripheral
markets, listing such reasons as its big representation of capital
goods and auto stocks that are sensitive to bad news on the Chinese
economy.
Also, the analysts see continued compression in peripheral bond
yields, a strong positive for those equities and that means the
shine will come off Germany's safe-haven position.
The FTSE 100 index also perked up, gaining 0.3% to 6,554.58.
Heavyweight Reed Elsevier PLC fell 2% after analysts at Citigroup
downgraded shares to neutral from buy.
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