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European stocks lifted by stronger banking and telecom shares
March 9, 2016 / 9:18 AM / 2 years ago

European stocks lifted by stronger banking and telecom shares

* Telecom Italia up on sector consolidation prospects

* Ct Agricole rises on cost-cutting plans

* VW falls as company faces U.S. subpoena

By Sudip Kar-Gupta

LONDON, March 9 (Reuters) - European shares rose on Wednesday as firmer banking, telecom and consumer goods stocks propped up the region’s equity markets, in spite of lingering signs of global economic weakness.

The pan-European FTSEurofirst 300 index, which fell 0.9 percent on Tuesday to around its lowest level in a week, rose 0.6 percent, as did the euro zone’s blue-chip Euro STOXX 50 index.

The FTSEurofirst remains down by around 7 percent since the start of 2016, with stock markets having been hit by signs of a slowdown in China, the world’s second-biggest economy, and evidence of weak economic activity in the euro zone.

However, Hampstead Capital hedge fund manager Lex Van Dam said expectations of more monetary stimulus measures from the European Central Bank (ECB) on Thursday were keeping stock markets afloat.

The ECB is expected to make a 10 basis-point cut to push its deposit rate, taking it deeper into negative territory, while some type of adjustment of the bank’s 1.5 trillion euro asset purchase programme is also seen as a near certainty.

“The market has rallied into the ECB meeting tomorrow,” said Van Dam.

Telecom Italia was one of the best-performing stocks in Europe, rising around 4 percent after comments by Italian and French leaders that they wanted to create major companies that can compete in Europe.

Credit Agricole rose 1.5 percent after the bank pledged to boost cost savings by 2019, while Heineken also gained 1.3 percent after Goldman Sachs upgraded the drinks group to “buy” from “neutral”.

However, Volkswagen shares fell as the German carmaker faced a subpoena from the U.S. Justice Department related to its diesel emissions probe, while Russia also said it would recall some VW models.

Today’s European research round-up (Editing by Hugh Lawson)

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