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22 February 2024

Europe stocks stage broad rebound after Wall St bounce

By Agencies


European shares rose on Friday, echoing a rebound on Wall Street, while a rally in crude oil helped energy stocks and the tech sector recovered some of this week's losses.

Construction group Sacyr Vallehermoso rose 3.7 per cent after a newspaper report that a French-backed group of banks and insurers were in talks to buy its one third stake in Eiffage.

French construction group Lafarge rose 3.4 per cent after a newspaper report said investment group GBL may raise its stake to 18 per cent and possibly to 25 per cent.

The rise in crude oil futures to close to $89 a barrel helped push up shares in BP, Total and Royal Dutch Shell, which moved up between 0.6 and 1.4 per cent.

By 0843 GMT the FTSEurofirst 300 index of top European shares was up 1.4 per cent at 1,314.66 points. The index has fallen by nearly 4 per cent this week as concern has grown about the outlook for the US economy, and analysts doubted any rally would be very long lived.

"The market is becoming aware that the crisis in the United States will indeed have an adverse impact on growth in Europe," said Heino Ruland, a strategist at FrankfurtFinanz in Germany.

"The (European) Q4 reporting season, which in my view will be quite good ... won't change the fact that we are in a bear market trend."



The broader European market fell nearly 2 per cent on Thursday when the European Central Bank left euro zone rates at 4.00 per cent, as expected.

The bank was viewed to be more likely to loosen monetary policy after ECB President Jean-Claude Trichet stressed the risk of slower growth alongside inflation pressures, but this did little to reassure equity investors.

"No one is looking at interest rates with any particular enthusiasm as we're still worried about inflation," said Justin Urquhart Stewart, a director at 7 Investment Management.

"You'd be betting against a wall of worry. Although markets are climbing a wall of worry, they do so on the basis of they've got a rope attached," he said.

Alcatel-Lucent joined the ranks of increasingly pessimistic tech companies, scrapping its dividend and recording a loss in its first year as a merged entity, as it cited an uncertain market outlook.

Alcatel-Lucent made an annual loss of $647.8 million, which beat forecasts in a Reuters poll for a loss of 789 million. Its shares rose 3.6 per cent.

Other tech and telecoms stock gained some respite from Thursday's sell-off as Vodafone and Nokia rose between 2.3 and 2.8 per cent respectively.

Nordic telecoms operator TeliaSonera topped the list of losers, falling 6.6 per cent after its earnings missed expectations and it announced a raft of job cuts.

The rise in index heavyweights BP and Royal Dutch Shell helped push up London's FTSE 100 index by 1.2 per cent. The index fell nearly 3 per cent on Thursday after the Bank of England cut British interest rates but reiterated its concern about rising inflation pressures.

Elsewhere in Europe, Frankfurt's DAX gained 1.5 per cent and Paris' CAC 40 rose 1.1 per cent. (Reuters)