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May 5, 2017, 12:22 p.m. EDT

European stocks end week at 21-month high ahead of French election

Oil prices send energy stocks on roller-coaster ride

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By Sara Sjolin and Carla Mozee, MarketWatch


AFP/Getty Images
Volatile oil prices whipped European energy companies around in Friday’s trade

European stocks climbed out of the red and finished at a 21-month high Friday, as buying appetite for assets perceived as risky returned ahead of the French presidential election.

The Stoxx Europe 600 index /zigman2/quotes/210599654/delayed XX:SXXP -3.67% turned higher during the session, ending up 0.7% at 394.54, its highest since August 2015.

The pan-European benchmark logged a 1.9% weekly advance, boosted by well-received earnings reports and hopes that centrist Emmanuel Macron will beat far-right Marine Le Pen in Sunday’s runoff race in France.

See: When are the election results due on Sunday?

France’s CAC 40 index /zigman2/quotes/210597958/delayed FR:PX1 -4.75%  finished up 1.1% at 5,432.40, sticking to its highest level since January 2008. The index closed the week up 3%, extending last week’s rise of 4.1%.

“We believe that the most immediate effect of a Macron win on Sunday would be to ameliorate concerns about the rise of populism in Europe for at least the next few months, likely providing a boost to global financial market sentiment,” said Peter Donisanu, analyst at Wells Fargo, in a preview of Sunday’s runoff race.

“Nevertheless, European market participants have largely priced in a Macron victory, potentially setting the stage for a short-term ‘buy the rumor, sell the news’ pullback in European risk assets,” he said.

Read: Brace for market mayhem if Le Pen unexpectedly wins French presidency

The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.9635%  hit $1.1000 late Friday, a level it hasn’t traded above since early November, according to FactSet data.

Also, the iShares MSCI France ETF /zigman2/quotes/202869500/composite EWQ -3.28% traded at its highest since July 2014 on Friday. In the fixed-income market, the yield on France’s 10-year bond /zigman2/quotes/211347162/realtime BX:TMBMKFR-10Y 0.00%  rose 1 basis point to 0.77%.

Germany’s DAX 30 index /zigman2/quotes/210597999/delayed DX:DAX -4.15%  closed at a record high, finishing up 0.6% at 12,716.89. The U.K.’s FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -3.64% moved up 0.7% to close at 7,297.43.

Read: European equities a buy, but watch for this Trump risk: Eaton Vance

Oil U-turns: After settling at the lowest level in five months on Thursday, oil prices staged a turnaround Friday, with West Texas Intermediate crude up nearly 2%. But for week, the contract was set for a 6% slide.

Read: OPEC faces high-stakes decision as oil drops to 5-month low

Shares of oil companies swung higher as crude prices turned positive. BP PLC   /zigman2/quotes/207305210/composite BP -6.11%  ended up 1.5%, Total SA   rose 2%, and Eni SpA /zigman2/quotes/209584888/delayed IT:ENI -6.23%  added 2.5%.

Other stock movers: Shares of International Consolidated Airlines Group SA /zigman2/quotes/208070069/delayed UK:IAG -14.85% /zigman2/quotes/204976351/composite ICAGY -12.39%  jumped 5.5% after the British Airways and Iberia parent said operating profit got a boost from lower fuel prices in the first quarter.

Also in the airline industry, budget carrier easyJet PLC /zigman2/quotes/202825892/delayed UK:EZJ -11.45%  gained 4.2% after reporting a 12% rise in passenger traffic for April.

See: European airlines take off after upbeat IAG, easyJet numbers

Pearson PLC /zigman2/quotes/204954587/delayed UK:PSON -3.69%   /zigman2/quotes/210441231/composite PSO -2.83%  surged 12.4% after the publishing company reported a rise in quarterly sales and confirmed its full-year outlook.

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Vestas Wind Systems AS /zigman2/quotes/205019303/delayed DK:VWS -0.71%  climbed 5.1%. The Danish wind-turbine manufacturer beat earnings forecasts after a quarter of strong sales in the U.S., Germany and China.

Struggling Italian lender Banca Monte dei Paschi di Siena SpA /zigman2/quotes/202470451/delayed IT:BMPS -4.31% said late Thursday it swung to a loss in the first quarter, hurt by declining revenue and one-time costs. Its shares are still halted after the company had to ask the Italian government for a bailout in December.

Economic news: The widely watched U.S. jobs report showed a bigger-than-expected 211,000 new hires in April, keeping alive expectations the Federal Reserve will raise interest rates again in June.

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Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin. Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee.

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