Europe close: Stocks advance on US-China trade deal, Brexit clarity
By Alexander Bueso
Date: Friday 13 Dec 2019
(Sharecast News) - European stocks were sharply higher on Friday following news that the US and China have reached an initial trade deal, thus avoiding a new round of tariffs, with a landslide victory for the Conservative Party in the UK general election also boosting sentiment.
By the end of trading, the Stoxx 600 was up by 1.09% at 412.02, as Germany's Dax added 0.46% to 13,282.72 and the French CAC 40 rose 0.59% to 5,919.02. London's FTSE 100 was 1.1% higher at 7,353.44.
In parallel, sterling was 1.39% higher against the euro to 1.1992.
Reports suggested that Beijing will avoid being slapped with a new round of tariffs after US President Donald Trump signed off on a deal to halve the existing duties on about $360bn of Chinese goods.
IG analyst Chris Beauchamp said: "This has bolstered sentiment in European stocks and in the euro, although there is still the risk that Trump will turn his eye to Europe if he can get a deal with China. US futures have surged, with more record highs looking likely today."
However, officials from Beijing have remained silent about any deal, with Chinese foreign ministry spokeswoman Hua Chunying merely reiterating in a daily briefing on Friday that any agreement would have to be mutually beneficial.
The Stoxx 600 was also driven higher by stocks with UK exposure following the Conservative Party's decisive election victory.
Housebuilders and banks surged, with Persimmon, Taylor Wimpey, Virgin Money, Barratt Developments, RBS, Bellway and Lloyds all racking up enormous gains.
XTB analyst David Cheetham said: "It is worth noting that this is still far from an ideal backdrop for UK assets, rather the best scenario out of a bad bunch. With Boris Johnson's promise to take the UK out of the EU by the end of next year we could well end up with what is effectively a no-deal Brexit.
"However, the size of the Conservative majority plays into the hands of a softer Brexit now, as the PM will not have to pander to the more Eurosceptic wings of the party and not be reliant on universal support from Tory MPs to pass Brexit-related legislation."
Meanwhile, Delivery Hero soared even after it agreed to buy South Korean takeaway delivery outfit Woowa Brothers for $4.0bn.
German consumer goods producer Henkel was also higher despite warning that the slowing demand experienced by its adhesives unit will lead to a decline in margins next year.
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