By Josie Cox
European stocks rose Friday, reversing a two-session sell off,
supported by a fresh slide in the euro that buoyed shares in the
region's major exporters.
Global stocks had suffered sharp declines over the previous two
days, burdened by downbeat economic data in the U.S. and fresh
geopolitical tensions in the Middle East, as Saudi Arabia and other
Gulf states launched airstrikes against rebel forces in Yemen's
capital earlier this week.
That had triggered a rush into assets deemed less risky during
times of volatility and away from stocks. On Friday, however, that
move showed signs of unwinding.
Ian Williams, economist and strategist at brokerage Peel Hunt
said that the selloff should be "attributed to technical and
liquidity considerations, rather than any significant shift in the
fundamentals."
Nick Lawson, a senior equity trader at Deutsche Bank echoed
this, saying it was likely a "knee-jerk reaction" triggered by
market levels and the news out of Yemen.
The Stoxx Europe 600 index added 0.6% in early trade Friday,
while Germany's DAX and France's CAC rose 0.7% and 0.2%,
respectively. Yields on so-called peripheral eurozone government
bonds also fell marginally, a further sign of a slight pickup in
investor appetite for riskier assets.
The euro resumed its slide against the U.S. dollar, after
inching higher during the previous two sessions. In early trade it
was 0.5% lower against the buck at $1.0819, taking losses so far
this year to just over 10.5% as a symptom of the stark divergence
between monetary policy in the U.S. and in Europe.
The dollar also rose against Japan's yen after figures showed
that Japanese consumer prices were flat from a year earlier in
February, deepening worries that the country is heading back toward
deflation two years after its central bank launched a radical
economic-revival program. The dollar was 0.2% higher against the
yen at 119.47.
Later on Friday, investors will be eyeing a third release of
fourth-quarter 2014 U.S. gross domestic product data. Strategists,
however, said that the impact of the reading on the market may be
muted as investors are more likely to respond to more recent
figures.
"Concern is already now on how low [U.S. growth in] the first
quarter of 2015 is going to be," strategists at Rabobank wrote in a
note.
In commodity markets, Brent crude was trading 1.6% lower after a
sharp rally on Thursday, spurred by the Yemen airstrikes. Gold was
0.4% lower on the day at $1,199.70.
Write to Josie Cox at josie.cox@wsj.com