(Reuters) – Eurozone stocks rose on Friday, marking a third week of gains, data showing factory activity in February hit a three-year high, while bullish quarterly results boosted confidence in a broader economic recovery.
The Eurozone index rose 0.9% as strong earnings at companies like Acciona and Hermès raised some optimism about a possible economic recovery.
The pan-European STOXX 600 index rose 0.5%, with regional industrial activity reaching a three-year high due to strong demand for manufactured goods at home and abroad.
Another reading shows that the eurozone’s current account surplus widened in December due to a rising trade surplus and a narrowing secondary income deficit.
Still, the STOXX 600 marked small gains for the week, after falling over the past three sessions as investor concern increased over rising inflation and the rocky rollout of the COVID-19 vaccine.
But basic resource stocks topped their peers this week with a 7% jump as improving industrial activity around the world pushed up commodity prices.
“This week’s slightly unfavorable price action has all the hallmarks of a temporary loss of momentum, not a structural reversal,” said Jeffrey Halley, senior market analyst at OANDA.
“There isn’t a big central bank in the world that is considering pulling off the monetary tap, except maybe China. (Markets) will remain inundated with zero percent central bank money throughout 2021 (and) much of that will be funneled into the stock market. “
The minutes of the European Central Bank’s January meeting, released on Thursday, showed policymakers expressed new concerns about the strength of the euro, but appeared relaxed in the face of the recent rise in government bond yields .
The bank’s relaxed stance was justified by the eurozone economy requiring continued monetary and fiscal support, as evidenced by a contraction of the Union’s dominant service industry in February.
The STOXX 600 has rebounded by more than 50% since collapsing to its lowest level for several years in March 2020, with the hope of a global economic rebound this year stimulating demand for sectors such as energy, mines, banks and industrial products.
London’s FTSE 100 trailed regional exchanges on Friday as retail sales fell in January and the pound rose against the dollar in nearly three years.
French carmaker Renault fell more than 4% after posting a record annual loss of 8 billion euros ($ 9.68 billion), while food group Danone and German insurer Allianz rose on optimistic business forecasts.
Report by Sagarika Jaisinghani in Bengaluru; Editing by Sriraj Kalluvila and Shailesh Kuber