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Sept. 21, 2016, 12:30 p.m. EDT

European stocks end at 2-week high as banks bounce after BOJ

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By Carla Mozee, MarketWatch


AFP/Getty Images

Stocks across Europe bounded higher Wednesday, bolstered by rises in financial shares after the Bank of Japan tweaked monetary policy in a way that should help yield-dependent businesses.

The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.41% gained 0.4% to 342.46, closing at its highest level in nearly two weeks.

Stocks rose after the BOJ unexpectedly said it would start targeting 10-year interest rates, committing to keep them around zero as part of a new policy framework aimed at bolstering inflation. The central bank will maintain quantitative easing until its inflation target of 2% is overshot, and it kept its main interest rates unchanged.

The bank is targeting a steeper yield curve, meaning yields on longer-dated bonds, such as the 10-year, are higher than shorter-dated bonds.

Read: Here’s why the Bank of Japan is putting its focus on the yield curve

“Anchoring the 10-year yield at 0% has two effects. First off, they’re guaranteeing that if the banks (or anyone else) buy 10-year bonds at this level, they won’t lose money,” said Marshall Gittler, head of investment research at FXPrimus, in a note.

“Secondly, by preventing 10-year yields from going below zero, the yields of longer-term bonds should stay positive. That will help the profitability of insurance companies and pension funds, which need longer-term assets to match their long-term liabilities,” he said.

The Stoxx Europe 600 Bank Index /zigman2/quotes/210599339/delayed XX:SX7P +0.79%  popped up 2% for its largest gain in nearly a month. Spain’s Banco Popular Español jumped 9.1%, France’s Société Générale SA /zigman2/quotes/206663756/delayed FR:GLE +0.80%  bulked up 1.9%, and Germany’s Commerzbank AG /zigman2/quotes/200193353/delayed DE:CBK +1.44%  rose 3.3%. Italy’s UniCredit SpA /zigman2/quotes/200769686/delayed IT:UCG +0.26%  added 3.6%.

Among insurers, AXA SA /zigman2/quotes/202169431/delayed FR:CS -0.28%  moved up 2.7% and Allianz SE /zigman2/quotes/205544832/delayed DE:ALV -0.19%  put on 1.2%.

The Bank of Japan’s move swings the spotlight on the European Central Bank, which this month left monetary policy unchanged.

Fed ahead: Investors have another key central bank meeting to grapple with later Wednesday. The U.S. Federal Reserve’s decision on whether to raise interest rates is due at 7 p.m. London time, or 2 p.m. Eastern Time.

Read: Here’s how the Fed’s doves and hawks will use the new inflation and sales data

Indexes: Italy’s FTSE MIB  leapt 0.9% to 16,349.82. In Frankfurt, the DAX 30 /zigman2/quotes/210597999/delayed DX:DAX +0.37% rose 0.4% to 10,436.49.

Spain’s IBEX 35 /zigman2/quotes/210597995/delayed XX:IBEX +1.06%  climbed 0.8% to 8,758.50. Banco Santander SA /zigman2/quotes/205677933/delayed ES:SAN +1.54%   /zigman2/quotes/202859081/composite SAN 0.00%  was up 3.2% following reports that the Spanish lender walked away from talks to buy Royal Bank of Scotland PLC’s   Williams & Glyn branches. RBS shares fell 0.3%.

The U.K.’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.07% advanced 0.1% to 6,834.77. In Paris, the CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 +0.56% closed 0.5% higher at 4,409.55.

Euro: The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.4113%  was trading at $1.1167, close to late Tuesday’s level around $1.1158. Against the yen, the shared currency /zigman2/quotes/210561215/realtime/sampled EURJPY +0.2428%  was buying ¥112.39, compared with ¥113.43 late Tuesday.

Read: Global yields rise after BOJ surprises with 10-year rate target

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/zigman2/quotes/210599654/delayed
XX : STOXX
393.23
+1.60 +0.41%
Volume: 0.00
Nov. 27, 2020 11:03p
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/zigman2/quotes/210599339/delayed
XX : STOXX
111.42
+0.87 +0.79%
Volume: 0.00
Nov. 27, 2020 11:03p
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/zigman2/quotes/206663756/delayed
FR : France: Euronext Paris
17.33
+0.14 +0.80%
Volume: 4.79M
Nov. 27, 2020 5:39p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
€13.49 billion
Rev. per Employee
€238,064
loading...
/zigman2/quotes/200193353/delayed
DE : Germany: Frankfurt
5.37
+0.08 +1.44%
Volume: 69,862
Nov. 27, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€166,016
loading...
/zigman2/quotes/200769686/delayed
IT : Italy: Milan
9.09
+0.02 +0.26%
Volume: 14.95M
Nov. 27, 2020 5:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
€20.29 billion
Rev. per Employee
€272,468
loading...
/zigman2/quotes/202169431/delayed
FR : France: Euronext Paris
19.73
-0.06 -0.28%
Volume: 6.84M
Nov. 27, 2020 5:37p
P/E Ratio
17.19
Dividend Yield
3.70%
Market Cap
€47.17 billion
Rev. per Employee
€1.13M
loading...
/zigman2/quotes/205544832/delayed
DE : Germany: Frankfurt
197.92
-0.38 -0.19%
Volume: 1,379
Nov. 27, 2020 8:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
N/A
Rev. per Employee
€707,118
loading...
/zigman2/quotes/210597999/delayed
DAX
DX : Xetra Indices
13,335.68
+49.11 +0.37%
Volume: 63,823
Nov. 27, 2020 6:30p
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/zigman2/quotes/210597995/delayed
XX : Spain: Madrid
8,190.70
+86.10 +1.06%
Volume: 415.13M
Nov. 27, 2020 5:38p
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/zigman2/quotes/205677933/delayed
ES : Spain: Madrid
2.47
+0.04 +1.54%
Volume: 68.38M
Nov. 27, 2020 5:38p
P/E Ratio
N/A
Dividend Yield
3.15%
Market Cap
€42.07 billion
Rev. per Employee
€405,338
loading...
/zigman2/quotes/202859081/composite
US : U.S.: NYSE
$ 2.91
0.00 0.00%
Volume: 4.65M
Nov. 27, 2020 5:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$50.77 billion
Rev. per Employee
$453,674
loading...
/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,367.58
+4.65 +0.07%
Volume: 1.42M
Nov. 27, 2020 4:59p
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/zigman2/quotes/210597958/delayed
FR : France: Euronext Paris
5,598.18
+31.39 +0.56%
Volume: 84,633
Nov. 27, 2020 6:05p
loading...
/zigman2/quotes/210561242/realtime/sampled
US : Tullett Prebon
1.1963
+0.0049 +0.4113%
Volume: 0.0000
Nov. 27, 2020 4:59p
loading...
/zigman2/quotes/210561215/realtime/sampled
US : Tullett Prebon
124.5117
+0.3015 +0.2428%
Volume: 0.0000
Nov. 27, 2020 4:59p
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Carla Mozée is a reporter for MarketWatch, based in London. Follow her on Twitter @MWMozee.

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