By Carla Mozee, MarketWatch
European stocks finished at a nearly three-week high Thursday, with oil shares pulled up alongside a surge in oil prices, while the market found support on indications the European Central Bank still stands ready to inject further stimulus into the eurozone economy.
The Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP +0.89% rose 0.6% to close at 340.60, as all sectors finished with gains. The benchmark’s close was the highest since Oct. 28, FactSet data showed, and Thursday’s win was its third in four sessions.
Oil advances: Energy shares were among the strongest performers, rising as West Texas Intermediate oil /zigman2/quotes/209723641/delayed CLF27 +0.77% and Brent crude futures each leapt nearly 2%. Those moves came after Saudi Arabia’s Energy Minister Khalid al-Falih said he was optimistic the Organization of the Petroleum Exporting Countries will reach a deal later this month to curb output for the oversupplied global oil market.
Leading shares of oil producers, Portugal’s Galp Energia SGPS /zigman2/quotes/206136034/delayed PT:GALP -0.83% climbed near the top of the Stoxx 600, ending up 4%. Sweden’s Lundin Petroleum AB advanced 1.6% and Italy’s Eni SpA /zigman2/quotes/200784534/delayed XE:ENI -0.06% tacked on 1.5%.
Energy engineering and construction group Petrofac Ltd /zigman2/quotes/202340229/delayed UK:PFC +0.78% bulked up 1.6% and Norwegian offshore engineer Subsea 7 SA /zigman2/quotes/202505552/delayed NO:SUBC +1.34% rose 0.6%, but France’s Technip SA slipped 0.2%.
The ECB and Yellen: Minutes were released from the European Central Bank’s October meeting. They showed policy makers, led by ECB President Mario Draghi, were open to boosting their €1.7 trillion stimulus efforts again if that’s what need to help support the eurozone’s economic recovery.
Separately, Yves Mersch, who sits on the ECB’s six-member executive board, said Thursday that the “fragility of the recovery calls for very cautious action,” by the central bank in deciding what’s next for monetary policy.
Early Thursday, a final October reading of annual inflation in the eurozone met expectations with a rise of 0.5%.
The dollar /zigman2/quotes/210598269/delayed DXY -0.79% hovered around 13-year highs Thursday as Federal Reserve Chairwoman Janet Yellen repeated the view that an interest-rate hike by Fed policy makers could come “relatively soon,” as progress in the U.S. labor market has continued and economic activity has picked up since the first half of 2016.
Yellen’s testimony was her first since Donald Trump won the U.S. presidential election last week. Markets have been pricing a roughly 90% chance the Fed will increase the federal-funds rate.
“It now looks almost impossible for the Fed not to raise rates next month—it’s painted itself in a corner and has to respond with a hike or all hell will break loose in the markets,” said Neil Wilson, markets analyst at ETX Capital, in a note.
The euro /zigman2/quotes/210561242/realtime/sampled EURUSD +0.8122% was buying $1.0661, trading around levels not seen since December 2015. Late Wednesday, the euro bought $1.0687 late Wednesday.
“Forex markets are now eyeing December’s key events for further direction—we have the Fed meeting and the Supreme Court ruling on triggering Article 50,” in the U.K., said Wilson. “Added to that is Italy’s increasingly important referendum, which could throw the euro into a tailspin if [Italy’s Prime Minister Matteo Renzi loses and resigns.”
Indexes: Major stock indexes finished higher, although Italy’s FTSE MIB was left behind with a loss of 4.5 points to 16,555.31.
Germany’s DAX 30 /zigman2/quotes/210597999/delayed DX:DAX +1.34% rose a more modest 0.2% to 10,685.54.
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