By Barbara Kollmeyer
European stocks were set for a third-straight winning session on Thursday, as investors took the outcome of several central bank meetings, including the Federal Reserve, in stride, but fresh data revealed that the EU region could be headed for a slowdown.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.33% rose 1.1% to 468.31, following a 1% rise on Wednesday. The index is up 1.4% for the week, recouping Monday’s drop that came amid worries about global contagion from indebted property group China Evergrande /zigman2/quotes/208605330/delayed HK:3333 -3.91% . The German DAX /zigman2/quotes/210597999/delayed DX:DAX +0.27% and French CAC 40 /zigman2/quotes/210597958/delayed FR:PX1 -0.05% gained 1% each.
Investors were waiting to see if Evergrande would make an interest payment on debt that is due Thursday.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX +0.19% was up 0.1%, as the British pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0363% surged on a hawkish view of the latest Bank of England rate decision, as one member switched to vote against the quantitative easing program.
Also Thursday, Norway’s Norges Central Bank raised its sight deposit rate to 0.25% from zero and said it would likely be raised again in December. Switzerland’s central bank left rates unchanged, while the Central Bank of the Republic of Turkey made a surprise cut in interest rates to 18% from 19%, sending the lira /zigman2/quotes/210561895/realtime/sampled USDTRY +0.2000% tumbling against the dollar.
The biggest decision in focus was Wednesday’s Federal Reserve outcome, where Chairman Jerome Powell said plans to taper the central bank’s bond-buying program could come at the November meeting and end by the middle of next year. Markets seemed to welcome the delay in the start of tapering, and ignored the hawkish undertone’s of the Fed’s outlook.
But purchasing managers index data released in Europe and the U.K. on Thursday showed growth momentum slowing as inflation sticks. The IHS Markit flash eurozone purchasing managers composite output index fell to 56.1 in September from 59.0 in August,a 5-month low.
“For now, the overall rate of expansion remains solid, despite slowing, but growth looks likely to weaken further in coming months if the price and supply headwinds show no signs of abating,” said Chris Williamson, chief business economist at IHSMarkit, in a note.
Europe’s ongoing natural gas shortage that has caused high electricity bills and shortages in the U.K. as well was also in the spotlight on Thursday. BP /zigman2/quotes/202286639/delayed UK:BP +0.14% /zigman2/quotes/207305210/composite BP +0.50% said it was “experiencing fuel supply issues at some” U.K. retail sites, with a handful temporarily closed due to lack of unleaded and diesel grades.
“These have been caused by delays in the supply chain, which has been impacted by industrywide driver shortages across the U.K. and we are working hard to address this issue,” said the company in an emailed statement. Shares of BP fell 0.7%.
A day earlier, the U.K. government agreed to subsidize U.S. fertilizer manufacturer CF Industries /zigman2/quotes/209482112/composite CF -0.67% to restart carbon dioxide production needed for U.K. food supply. Last week, the company said it would shut down its U.K. fertilizer plants because of high natural gas prices, sparking concerns the country would run into food shortages.
Among moving stocks, banks, industrial, apparel, software and pharmaceutical sectors were all moving higher.
Shares of Valeo /zigman2/quotes/200919386/delayed FR:FR -2.11% surged 7%, at the top of the Stoxx gainer’s list, after the auto-supplies company reported stronger-than-expected earnings for the first half of the year and backed its full-year view.
Also climbing were shares of Zardoya, after U.S.-based Otis Worldwide announced Thursday a deal to buy the 49.99% of the Spanish-based elevator service company that values it at EUR3.3 billion ($3.87 billion). Otis plans to delist Zardoya, whose shares surged 31%.