By Carla Mozee, MarketWatch
Euro extends its rise; Italian banks shine
Germany led advances in European equity markets Friday, getting
a lift as business optimism in the region's largest economy climbed
to a record and as one of Germany's major political parties opened
the door to efforts aimed at breaking a political impasse.
German stocks managed to push higher even as the euro advanced
to a two-month high against the U.S. dollar.
Trading volumes will likely be thin on Friday as U.S. markets
will be on a shortened schedule
(http://www.marketwatch.com/story/when-do-markets-close-for-thanksgiving-2017-11-17)
following Thursday's Thanksgiving Day holiday.
How key gauges moved: The export-heavy, and euro-sensitive,
German DAX 30 benchmark picked up 0.6% to 13,086.59, on course to
break a two-day run of losses and on track for a weekly rise of
0.7%.
In Paris, the CAC 40 claimed a 0.4% rise at 5,401.08 following
Thursday's close at a near two-week high. In Madrid, the IBEX 35
picked up 0.4% to reach 10,072.30.
But the U.K.'s FTSE 100 index was down 0.1% at 7,412.76. That
helped keep a lid on gains for the Stoxx Europe 600 , which rose
less than 1 point to 387.28. Health care and oil and gas stocks led
the declining sectors on the pan-European index. But basic material
and financial shares were higher. On Thursday, the benchmark closed
up less than 1 point
(http://www.marketwatch.com/story/european-stocks-head-toward-2nd-straight-loss-as-euro-pushes-higher-2017-11-23)
after a topsy-turvy session.
For the week, the Stoxx 600 was on course to rise 0.9%. That
would be the first weekly rise in three.
The euro broke above $1.1900 for the first time since late
September, rising to $1.1920 from $1.1850 late Thursday in New
York. The shared currency has added roughly 1.2% this week.
A stronger euro can be a headwind to shares of European
exporters, as holders of other currencies may find it more
expensive to buy goods from European companies.
What's driving markets: Businesses in Germany have been upbeat
about their prospects this month and for the months ahead. German
think tank Ifo said Friday its business climate index rose to a
record high
(http://www.marketwatch.com/story/german-business-sentiment-pushes-to-record-high-2017-11-24)
of 117.5 points, surpassing expectations.
"Germany is on track for an economic boom," said Ifo president
Clemens Fuest in the report.
The euro extended gains following the Ifo report. That added to
its rise on Thursday after an upbeat reading on eurozone services
and manufacturing activity
(http://www.marketwatch.com/story/eurozone-business-booming-as-pmis-jump-2017-11-23)
and a finding of higher growth in German gross domestic product
(http://www.marketwatch.com/story/german-economy-picked-up-speed-in-3q-2017-11-23).
The bulk of responses to Ifo survey came before the collapse of
talks to create a coalition to form a German government on Sunday.
But on Friday, Germany's Social Democrats reportedly dropped their
hard refusal
(https://www.politico.eu/article/martin-schulz-social-democrats-mulling-renewed-grand-coalition-with-angela-merkel/)
to set up another Grand Coalition to govern alongside Chancellor
Angela Merkel's Christian Democrats, raising anticipation that the
country's political crisis may be resolved.
Meanwhile, Italian banks charged higher following reports that
new rules proposed in the European parliament could help lenders
more easily dump their portfolio of bad loans.
What strategists are saying: "The news that Angela Merkel and
her CDU-CSU party are set to meet with their former Social Democrat
coalition partners acted as a pick-me-up for the euro," said Connor
Campbell, financial analyst at Spreadex, in a note.
"These gains took the edge off the DAX's own growth, with a 1%
lunchtime surge halving to 0.5%; still, this keeps the German index
above 13,000, a level it's struggled with for the past few
sessions," he said.
Stock movers: Italian banks were among the best performers on
the Stoxx 600, with BPER Banca SpA (BPE.MI) up 6%, Banco BPM SpA
(BAMI.MI) higher by 4.2% and Unione di Banche Italiane SpA (UBI.MI)
up 3%.
Paddy Power Betfair PLC tacked on 3.4% following a Reuters
report
(https://uk.reuters.com/article/us-crown-resorts-m-a/exclusive-paddy-power-betfair-and-william-hill-hold-deal-talks-with-crownbet-idUKKBN1DO05E)
the Irish bookmaker has held talks about a deal with Australian
online gambling company CrownBet. Paddy Power's rival William Hill
PLC (WMH.LN) on Friday said it's in preliminary talks about a
possible merger between its William Hill Australia
(http://www.marketwatch.com/story/william-hill-in-talks-with-crownbet-over-tie-up-2017-11-24)
subsidiary and CrownBet.
William Hill shares were down 0.8%.
BT Group PLC (BT.A.LN) fell 1.2%, with Deutsche Bank cutting its
price target on the British telecoms group to GBP2.38 from GBP2.68,
according to Dow Jones Newswires.
Brexit watch: U.K. Prime Minister Theresa May was in Brussels on
Friday, discussing Brexit matters with the European Council
President, Donald Tusk. May is reportedly aiming to extend an offer
of GBP40 billion for a so-called divorce bill as Britain prepares
to leave the European Union. EU officials have said that issue
needs to be settled before they can start talks on trade of goods
and services.
On Friday, U.K. government officials reportedly clawed back on a
Downing Street spokesman's statement
(http://www.huffingtonpost.co.uk/entry/brexit-northern-ireland-customs-union_uk_5a180588e4b064948073cf70)
that suggested the possibility of Northern Ireland staying in the
EU's customs union after the U.K. breaks from the bloc.
Separately on Friday, the Irish government appeared headed
toward a snap election next month. The country's second-largest
political party, Fianna Fáil, lodged a no-confidence motion against
Deputy Prime Minister Frances Fitzgerald, with the move stemming
from controversy over her handling of a police whistleblower while
she served as justice minister.
Fianna Fáil is in a support deal with the minority government
led by the Fine Gael party.
(END) Dow Jones Newswires
November 24, 2017 11:22 ET (16:22 GMT)
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