9-16-13 9:17 AM EDT | Email Article
 

By Sara Sjolin, MarketWatch

 

LONDON (MarketWatch) -- European stock markets moved firmly higher on Monday after former U.S. Treasury Secretary Lawrence Summers over the weekend pulled out of the race to become next U.S. Federal Reserve Chairman.

 

The Stoxx Europe 600 index jumped 0.8% to 313.81, on track for the highest closing level in more than five years.

 

Among notable movers in the benchmark, shares of Hennes & Mauritz AB climbed 4% after the Swedish clothing retailer said same-store sales rose 4% in August.

 

Shares of the world's largest insulin maker Novo Nordisk AS (NVO) rose 2.2% after Barclays lifted the firm to overweight from underweight, based on a brighter outlook for the U.S. insulin market.

 

For the broader European stock markets, investors welcomed news that Summers won't be running for next Federal Reserve Chairman, saying he has "reluctantly concluded that any possible confirmation process for me would be acrimonious."

 

Many analysts considered Summers, previously seen as the front runner for the post, as a relatively hawkish pick for the central bank's top post and as more skeptical toward quantitative easing than Janet Yellen, the Fed's vice chairwoman.

 

Yellen has also been one of the front-runners to succeed Ben Bernanke and Summers's move potentially paves the way for her to become the next Fed chief.

 

Analysts at Danske Bank said in a note that Yellen is more likely to continue the current policy at the Federal Reserve, which is seen as positive for both the equity market and U.S. Treasurys.

 

"That said, the market will probably remain cautious so close to the FOMC meeting. Hence the full impact of Summers' withdrawal will be seen only if the current Fed manages to deliver a credible dovish message amid the initiation of QE tapering at Wednesday's meeting. If managed, such a dovish message would now have a much bigger impact with Yellen standing next in line," the analysts said.

 

The Federal Open Market Committee meets on Tuesday and Wednesday to discuss monetary policy, with analysts speculating the central bank could start scaling back its $85-billion-a-month asset-purchase program. Also: What to watch for beyond tapering.

 

U.S. stock futures rallied, while Treasury yields moved lower.

 

On the data front in the U.S. on Monday, the Empire State manufacturing index edged down to 6.3 in September from 8.2 in August, falling short of analyst expectations.

 

Back in Europe, Germany's DAX 30 index rallied 1.3% to 8,618.20, on track for the highest close on record.

 

Banks were among notable movers in Frankfurt, with Commerzbank AG up 1.3% and Deutsche Bank AG (DB) rising 1%.

 

Shares of Siemens AG (SI) inched 0.6% higher after Deutsche Bank lifted the European industrial goods and services sector to overweight and mentioned the German conglomerate as one of the preferred stocks.

 

France's CAC 40 index put on 1% to 4,153.66, while the U.K.'s FTSE 100 index gained 0.9% to 6,640.28.

 

Vedanta Resources PLC picked up 1.8% in London after the miner appointed Tom Albanese as chairman of its subsidiary, Vedanta Resources Holdings Ltd. Albanese stepped down as Rio Tinto's chief executive earlier in the year.

-Sara Sjolin; 415-439-6400; AskNewswires@dowjones.com

 

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(END) Dow Jones Newswires

09-16-13 0917ET

Copyright (c) 2013 Dow Jones & Company, Inc.
Copyright 2014 MarketWatch
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