Sep 28 (Reuters) – European stocks gained on Wednesday as Britain’s blue chip index reversed losses after the Bank of England announced it would buy bonds to ease market turbulence stemming from the government’s fiscal plans. British government.
The Continental STOXX 600 Index (.STOXX) rose 0.3% after falling almost 2% earlier in the session, as the region’s energy crisis intensified and bond yields continued to rise. markets fueled concerns about a recession.
The BoE said it would buy as many long-term government bonds as needed by Oct. 14 to stabilize financial markets, adding it would postpone the start of its gilt-selling program to next week. . read more read more
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The pound rose and the prices of the British gilt exploded. London’s FTSE 100 (.FTSE) closed 0.3% higher after falling 2%.
“I don’t think the markets take this for granted. They see this as very necessary first aid,” said Steve Sosnick, chief strategist at Interactive Brokers.
The BoE’s move came after the International Monetary Fund and ratings agency Moody’s stepped up pressure on Britain to reverse a new economic strategy revealed last week that proposed unfunded tax cuts, sparking a spike in bond yields and a sharp fall in the pound.
“We will still have to see over the next few days and weeks if this was a temporary measure. We will have to see if the UK government backs off from its budget plans after the disastrous response it has received in the market .,” Sosnick said.
Eurozone borrowing costs fell, reversing an earlier rise to multi-year highs. Read more
The European Central Bank may need to raise rates another 75 basis points at its October meeting and return in December to a level that no longer stimulates the economy, policymakers said on Wednesday. Read more
The ECB raised interest rates by a combined 125 basis points in its last two meetings.
On the STOXX 600, energy (.SXEP), healthcare (.SXDP) and mining (.SXPP) rose between 0.4% and 2% but were countered by a sharp decline in banking stocks (.SX7P ) and basic consumption.
Meanwhile, geopolitical tensions have escalated as Europe investigates what Germany, Denmark and Sweden have described as attacks on two Nord Stream pipelines at the center of an energy standoff. Read more
Shares of fish farmers such as Mowi (MOWI.OL), Leroy Seafood (LSG.OL) and SalMar (SALM.OL) fell between 18% and 30% after the Norwegian government proposed a 40% resource tax for salmon and trout farming. from tax year 2023. find out more
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Reporting by Devik Jain, Amruta Khandekar and Susan Mathew in Bengaluru and Dhara Ranasinghe in London; Editing by Subhranshu Sahu, Savio D’Souza, Vinay Dwivedi and Jonathan Oatis
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