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European stocks ended with gains yesterday, reversing pre-weekend losses as investors took a new look at upbeat US jobs data that had sparked heavy selling on prospects of a reduction in the US Federal Reserve’s stimulus policy.
Investor sentiment was also soothed by easing concerns over Portugal’s political crisis, dealers said.
It “appears that markets are coming around to the idea that the idea of tapering may not be such a bad thing despite rising bond yields,” Michael Hewson said, an analyst at CMC Markets UK.
London’s FTSE 100 index of leading companies ended the day 1.17% higher, to close at 6,450.07 points compared with Friday’s closing level.
Frankfurt’s Dax 30 gained 2.08% to 7,968.54 points and in Paris the Cac 40 increased 1.86% in value to 3,823.83.
In Portugal, traders also welcomed a last-minute political deal to avert the collapse of the coalition government.
In midday deals on Wall Street, stocks traded mixed with the Dow Jones Industrial Average adding 0.52%, the broad-based S&P 500 rising 0.51%, while the tech-rich Nasdaq Composite Index shedding 0.07%.
European equities had slumped on Friday as better-than-expected US non-farm payrolls data strengthened expectations that the Fed will taper its vast stimulus, while US stocks surged as the solid report spurred also investor confidence in the recovery of the world’s biggest economy.
“Stocks in Europe jumped higher... propelled by Wall Street’s late advance on Friday as investors digested the solid US monthly jobs report,” said ETX Capital analyst Ishaq Siddiqi in London yesterday.
“Reaction to the report was dramatic; stocks on both sides of the Atlantic rose after the payrolls release only to slide as the figure reignited fears that the Federal Reserve now have reason to start tapering stimulus sooner than the market has braced itself for.”
In foreign exchange activity, the euro rose to $1.2864 from $1.2832 late in New York on Friday, when it had also briefly dived to $1.2806, the lowest level since May 17.
European markets staged an impressive rally on hopes that the US economy recovery was gaining traction.
On the London Bullion Market, the price of safe-haven precious metal gold - which normally rises in times of economic uncertainty — slid to $1,235.25 an ounce from $1,272.76 on Friday.
In company news, shares in Renault added 1.26% to €55.63 on media reports saying the French car maker may sign a deal this month with Chinese auto giant Dongfeng to form a 11bn yuan ($1.8bn) joint venture.