MT ArcelorMittal

By Steve Goldstein, MarketWatch

The path of least resistance was higher as European stocks on Friday advanced for the sixth time in eight tries on hopes for both monetary policy and fiscal stimulus.

The Stoxx Europe 600 gained 0.47% to 391.78, with steelmakers including Thyssenkrupp (TKA.XE), Voestalpine (VOE.VI) and ArcelorMittal (MT.FR) gaining ground.

The German DAX increased 0.68% to 12371.89, the French CAC 40 increased 0.23% to 5633.34 and the U.K. FTSE 100 leaped 1.05% to 7428.21.

The gains in the U.K. were particularly strong as the Bank of England's Michael Saunders -- who in 2017 voted for rate hikes -- said the central bank might want to consider reducing interest rates even if the U.K. government reaches an agreement with the European Union over departing.

"In such a scenario - not a no-deal Brexit, but persistently high uncertainty - it probably will be appropriate to maintain an expansionary monetary policy stance and perhaps to loosen further," he said in remarks that pressured the British pound .

Strategists at RBC Capital Markets say governments may take the mantle from central banks in attempting to spur growth.

"The spreading economic downturn and the lack of room for monetary policy have increased calls for fiscal policy to step up. We firmly believe that this will be a growing theme over the coming months and quarters and will eventually have a significant impact on markets," the strategists told clients.

Former German finance minister Wolfgang Schauble, known for being reluctant to spend and now president of the German parliament, this week called for a review of fiscal policy.

Strategists at Morgan Stanley meanwhile say while global price-to-equity ratios offer little headroom, European valuations are much closer to the cycle average, at 13.7 times earnings.

Imperial Brands (IMB.LN) continued to lose ground after Thursday's profit warning, falling 2.4% to 1754 pence. "Imperial's disappointing performance on its vaping portfolio raises questions if brand proposition and level of investments are adequate to successfully compete in the new world of Tobacco in our opinion," said Bank of America Merrill Lynch analysts who reiterated an underperform and lowered its price target to 1650 pence from 1850 pence.

Osram Licht (OSR.XE) rose 3% to 39.88 euros after Ams AG (AMS.EB) raised its takeover bid to 41 euros per share. Ams has been vying with a consortium of Bain Capital Private Equity LP and Advent International Corp in trying to buy the German lighting firm.

Ams shares rose 1.5% in Swiss trade.

(END) Dow Jones Newswires

September 27, 2019 06:20 ET (10:20 GMT)

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