Home / Business / World Business / Banks boost European bourses after Fed signals rate hike

Banks boost European bourses after Fed signals rate hike

The banking sector drove a strong open for European stocks on Thursday after the U.S. Federal Reserve signaled a likely December rate hike and announced it would begin trimming its balance sheet in October.

The pan-European STOXX 600 gained 0.3 percent while euro zone stocks and blue-chips followed suit as the U.S. central bank’s optimism on economic activity stoked renewed enthusiasm for financials and cyclical sectors in Europe.

Related stories:

Banks, the biggest gainers from interest rate raises which cushion margins, jumped 1.2 percent to a one-month high on the prospect of the European Central Bank following the U.S. in bringing ultra-loose monetary policy to an end.

Analysts have been increasing their earnings expectations for European banks for much of the past 12 months.

Commerzbank led gainers, up 3.8 percent as it also got a further boost from a Reuters report that UniCredit approached it for a possible merger, which sent shares up in late trading on Wednesday.

Shares in the Italian lender were up 1.3 percent.

Merger and acquisition activity continued to drive shares with Irish building materials firm CRH jumping 5 percent, bolstering the construction sector, after it agreed to buy U.S. cement maker Ash Grove Cement Co .

Among fallers, troubled British outsourcer Capita slumped 9 percent after first-half revenue slipped and the hunt for a new CEO continued. (Reuters)

Check Also

Asia stocks slip, yen and franc rise as N.Korea moots H-bomb test

Asian stocks fell and the Japanese yen and Swiss franc gained on Friday after North …

Road to electric car paradise paved with handouts

The Norwegian island of Finnoey has the highest density of electric cars in the world. …