European stock markets rose solidly yesterday, led by Milan’s main index and Italian banking shares, after ailing UniCredit said it would axe thousands of jobs and raise billions of euros.
In London, the FTSE 100 up 1.1% to 6,968.57 points; Frankfurt — DAX 30 up 0.8% to 11,284.65 points; Paris — CAC 40 up 0.9% to 4,803.87 points and Milan — FTSE Mib up 2.5% to 18,827.61 points at the close yesterday.
Wall Street also posted gains as attention was focused on a much-anticipated Federal Reserve rate meeting, while analysts said a Trump-fuelled rally that saw the Dow reach another record close Tuesday may have been overdone.
Leading Asian stock markets ended higher, with Tokyo closing at a one-year high.
Oil prices advanced as the International Energy Agency hiked its forecast for global crude demand growth, but then ran into profit-taking.
Outside the eurozone, London gained 1.1% as traders assessed a bigger-than-expected jump to British inflation, partly the result of a weaker pound following the Brexit referendum.
Separate data showed that despite uncertainty over Italy’s troubled banks and upcoming elections in Europe, investor confidence in Europe’s economic powerhouse Germany held steady this month.
Mike van Dulken, head of research at Accendo Markets, said stock market sentiment was buoyed yesterday “by suggestions of progress in recapitalising Italy’s troubled banks as well as expectations that the Fed will...still signal a cautious path for further rate hikes” following an expected raise today.
Italy’s biggest bank, UniCredit, announced plans yesterday to slash 14,000 jobs as the country gets to grips with political instability and a banking crisis.
The bank, one of the worst performers in European bank stress tests, confirmed it would also need €13bn ($13.8bn) in fresh capital from investors despite political complications in Italy and the nation’s third-largest bank scrambling to avoid a government-led rescue.
UniCredit shares surged by 15% following the announcement, helping lift banking shares everywhere in Europe.
There is meanwhile little doubt that the US Federal Reserve will raise its benchmark interest rate today for only the second time in a decade.
Any rate move would come against the backdrop of US unemployment at a nine-year low, with jobs being created at an average of 180,000 per month.
The world’s biggest economy also grew at better than 3% in the most recent quarter amid some signs of a pickup in inflation.
Investors are already looking past this week’s Fed decision for guidance on next year’s rate moves, but Craig Erlam, at Oanda, said that rising oil prices and the Trump administration’s spending plans are clouding the outlook.
“The Fed may be forced to raise interest rates at a faster pace that it had planned and the markets have currently priced in,” he said.


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