By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) -- European stock markets notched moderate
gains on Monday, while Italian stocks rallied on relief that a new
government was sworn in over the weekend.
The Stoxx Europe 600 index rose 0.5% to end at 297.39, 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 European
markets.
Analysts said that European 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
this week, though it's expected to keep policy unchanged.
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.
Positive news from Italy also helped underpin markets Monday.
Enrico Letta was sworn in as Italian prime minister on Sunday after
a lengthy political deadlock. "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.
Italian stocks rallied on Monday, with the FTSE MIB index
closing up 2.2% to 16,929.68. Shares of banking group UniCredit SpA
rose 2.5%.
Yields at an Italian bond auction of notes maturing in 2023
earlier in the day dropped to their lowest level since October
2010.
Among other indexes, France's CAC 40 index gained 1.5% to
3,868.68, with heavyweight Sanofi SA (SNY) up 1.5% and BNP Paribas
SA up 1.9%.
The German DAX 30 index rose 0.8% to end at 7,873.50, with
Volkswagen AG shares up 2.6%.
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 from the
Chinese economy.
Also, the analysts see continued compression in peripheral bond
yields, a strong positive for those equities. That in turn means
the shine will come off Germany's safe-haven position, according to
J.P. Morgan.
The FTSE 100 index gained 0.5% to 6,458.02. Heavyweight Reed
Elsevier PLC fell 1.8% after Citigroup downgraded the stock to
neutral from buy.
Aberdeen Asset Management PLC surged 8% 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.
In Norway, Aker Solutions ASA shares slumped more than 21% after
the oil-field products and services group warned that earnings
would "considerably lag current consensus market estimates," due to
cost overruns.
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