Europe Markets

Europe closes higher on signs of trade war easing; Italy stocks falls; Deutsche Wohnen up 9%

Key Points
  • Stocks worldwide are experiencing a reprieve after the Chinese Ministry of Commerce on Thursday indicated that it would not escalate the trade war with Washington, urging negotiation and collaboration in pursuit of a "calm" resolution.
  • U.K. opposition Labour party leader Jeremy Corbyn said on Thursday that it would trigger an emergency debate in parliament next week, in a bid to stop Johnson taking Britain out of the European Union without a withdrawal deal on October 31.

European stocks closed higher on Friday after China struck an accommodating tone over its trade war with the U.S., while British opposition lawmakers plan to trigger an emergency debate to prevent a no-deal Brexit.

The pan-European Stoxx 600 ended the session 0.6% higher, with almost every sector in positive territory and China-exposed basic resources stocks jumping 2.5%.

However, Friday's rally marked the end of a volatile month for European stocks. Britain's FTSE 100 index, which was up 0.3% at the closing bell, was down 5.3% in August in its worst monthly fall since August 2015.

Bucking Friday's trend were Italian stocks, which fell on the back of new political developments in the country. Luigi Di Maio, leader of Italy's Five-Star Movement, said on Friday his party would only enter a coalition with opposition PD if it agreed to a string of policy demands, denting hopes that some political stability would soon be restored in Rome.

Italy's FTSE MIB was more than 0.3% lower during afternoon deals, with Banco BPM slumping to the bottom of the Stoxx 600 on a 3% loss.

More broadly, stocks worldwide are experiencing a reprieve after the Chinese Ministry of Commerce on Thursday indicated that it would not escalate the trade war with Washington, urging negotiation and collaboration in pursuit of a "calm" resolution.

Stocks on Wall Street turned negative on Friday, erasing earlier gains, with the Nasdaq shedding 0.4% in late morning trade.

Back in Europe, investors continued to monitor the fallout from U.K. Prime Minister Boris Johnson's suspension of parliament. The main opposition Labour party said on Thursday that it would trigger an emergency debate in parliament next week, in a bid to stop Johnson taking Britain out of the European Union without a withdrawal deal on October 31.

The no-deal scenario is widely opposed in the British parliament, and the elevated risk of it becoming reality has sent sterling lower.

In corporate news, Reuters reported on Thursday that French lender BNP Paribas plans to bid for Deutsche Bank's equity derivatives book, with the intention of securing a deal within the next few weeks.

On the data front, French August CPI (consumer price index) inflation came in at 1.2% year-on-year, slightly softer than in July but in line with forecasts. Spanish retail sales rose by 3.2% in July from a year earlier after climbing by 2.5% in June.

U.K. consumer sentiment surveys revealed that confidence ebbed away from British businesses and consumers in August as the Brexit crisis metastasized, suggesting political turmoil is increasingly impacting the economy.

Stocks on the move

Deutsche Wohnen shares jumped 9.6% after a German newspaper reported that an incoming rent freeze in Berlin could be more lenient than previously planned.

Shares of Danish hospital equipment maker Ambu saw its shares rise 7% after a positive recommendation from the U.S. Food and Drug Administration (FDA).

At the other end of the Stoxx 600 was jewelry maker Pandora, which ended the session 3% lower. The Danish company recently announced it would undergo an extensive rebrand in a bid to boost sales.