EUROPE MARKETS: European Stocks Seesaw Around 10-week High As Banks Rise, H&M Slides
By Carla Mozee, MarketWatch
Euro gains slightly from late-Wednesday levels
European stocks wavered Thursday, potentially moving toward their first loss in six sessions. Shares in Swedish apparel retailer H&M slid after a disappointing earnings report, but bank shares extended gains on rate-hike prospects.
The Stoxx Europe Index was up less than 1 point at 385.74 and has been swaying between small gains and losses. Decliners were led by consumer-related and utility stocks. But oil and gas and financial shares were among advancing sectors. The index on Wednesday closed up 0.4% (http://www.marketwatch.com/story/european-stocks-jump-to-10-week-high-led-by-alstom-after-siemens-deal-2017-09-27), marking a 10-week high and its fifth win in a row, aided by gains for bank stocks.
Bank stocks outperformed the broader market again Thursday, pushing the Stoxx Europe 600 Banks Index up by 0.8%, as investors priced in the prospect of higher interest rates. Higher rates tend to boost the banking sector as it means they can charge more for their loans.
In that group, Germany's Deutsche Bank AG (DBK.XE) (DBK.XE) drove up 3.9%, Spain's Banco Santander SA (SAN) rose 1.2%, France's Societe Generale SA (GLE.FR) gained 1.3% and the U.K.'s Lloyds Banking Group PLC (LLOY.LN) (LLOY.LN) rose 0.6%.
Bank of England's Chief Economist Andy Haldane, in a Sky News interview (http://news.sky.com/story/interest-rate-rise-should-not-be-feared-says-bank-of-england-economist-11056411) published late Wednesday, said a rise in borrowing costs would represent a "good news story" as it would reflect improvement in the British economy.
"The markets believe a hike in U.K. rates could come after the Bank of England November 2nd meeting, with suggestions of a 0.25% hike to 0.5%," said analysts at FXPro in a note.