Europe Markets

European stocks close higher as trade hopes offset US political uncertainty

Key Points
  • Investor focus is largely attuned to U.S. politics, following the release of a whistleblower complaint against President Trump.
  • U.S. and Chinese trade negotiators are set to meet in Washington, D.C., on Oct. 10, three people close to the talks told CNBC.
  • European Commission President Jean-Claude Juncker says that Britain will be responsible if a Brexit deal is not found.

European shares traded higher on Friday as cautious optimism returns to markets over the state of U.S.-China trade relations, though gains may remain capped by escalating political uncertainty in the United States.

The pan-European Stoxx 600closed provisionally up around 0.42% during trade, with basic resources adding 1.6% to lead gains as the majority of sectors traded in positive territory, while utilities slipped 0.4%.

Britain's FTSE 100 led the upward momentum, hitting its highest since August 2 during the morning, as sterling fell after Bank of England Monetary Policy Committee (MPC) member Michael Saunders said it is "quite plausible" that the central bank's next move is a rate cut.

The index tends to move inversely to GBP on account of the proportion of FTSE 100 companies' profits denominated in dollars. Sterling pared its initial losses by the afternoon session to trade flat around $1.2311 at the closing bell.

Investor focus is largely attuned to political developments in the U.S., following the release of a whistleblower complaint against President Donald Trump.

The report, published on Thursday, claimed the U.S. leader abused his office by enlisting the support of Ukraine to interfere in the 2020 U.S. election and that his administration tried to "lock down" records of a conversation between Trump and Ukrainian President Volodymyr Zelensky.

It sets the stage for an impeachment inquiry into the president that was announced by U.S. House of Representatives Speaker Nancy Pelosi earlier in the week.

On the U.S.-China trade front, negotiators on both sides are set to meet in Washington, D.C., on Oct. 10, three people close to the talks told CNBC on Thursday.

Stocks on Wall Street traded higher on Friday, with the S&P 500 trading flat as bank stock increases were offset by losses in semiconductor stocks. One chip stock, Micron, dragged others in the sector down after it admitted that its inability to sell to Huawei had hurt its profits.

Back in Europe, political developments closer to home also weighed on investors' minds. European Commission President Jean-Claude Juncker told a German newspaper Friday that Britain would be responsible if a Brexit deal is not found.

U.K. Prime Minister Boris Johnson on Thursday said that tempers needed to be calmed down following furious scenes in Parliament the previous day. His ruling Conservative Party is set to kick off its annual conference in Manchester next week.

Gloomy European data was also in focus Friday, as eurozone economic sentiment came in at its weakest since February 2015, sinking from 103.1 in August to 101.7 in September.

Consumer confidence in September improved slightly to -6.5 from -7.1 in August, while business climate measures declined to -0.22 in September from +0.12 in August.

Factory confidence across the bloc hit its lowest in six years during September, according to the European Commission's industrial confidence survey, which slumped to -8.8 in September from -5.8 in August.

In terms of individual stocks, telecoms firm Altice topped the Stoxx 600 in afternoon trade, with shares gaining 5.5% after the company announced on Thursday that it would reduce its share capital by canceling 200 million treasury shares.

Osram Licht shares climbed 5.3%, while U.K. home builder Persimmon gained 4.5% after Jefferies upgraded the stock to "buy" from "hold" on the assertion that Brexit risks to the business have been overplayed.

Philips shares posted a 5.4% drop, sinking to the bottom of the European blue chip index, while Swedish medical tech company Getinge slipped almost 4%.