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Europe Stocks Post Third Weekly Gain With Recovery Fund in Focus

Europe Stocks Post Third Weekly Gain With Recovery Fund in Focus

European stocks closed higher, extending a weekly gain, after fluctuating all day amid earnings reports and as investors focused on talks between European Union leaders over the bloc’s recovery fund.

The Stoxx Europe 600 Index edged up 0.2% to advance for a third week. Carmakers outperformed on Friday, with Germany’s Daimler AG rising on better-than-expected results.

EU leaders at the summit will try reach agreement over the 750 billion euros ($854 billion) of economic stimulus measures, though German Chancellor Angela Merkel cautioned that big differences remain in the fund talks. While European stocks have outperformed U.S. and global shares since the plan was announced mid-May, negotiators have played down the chances of a deal ahead of the talks.

After a strong rebound from March lows, strategists on average in a Bloomberg News poll expect European equities to end the year lower than current levels.

Europe Stocks Post Third Weekly Gain With Recovery Fund in Focus

“Consensus expectation has dropped recently and isn’t looking for an agreement this weekend anymore. Hence it would be a big positive surprise,” said Carsten Roemheld, capital markets strategist at Fidelity International. “It will be more the case that we get an update on where we stand and focus on details in any remarks from officials to see if we progress toward a solution or, worst case, if there is some hardening of battle lines.”

While strategists are predicting losses by year-end for European equities, institutional investors are piling more money into the region’s stock funds. Europe had its largest weekly inflow in more than a month with $1.3 billion, according to Bank of America Corp., citing EPFR data.

Earnings are also in focus, with Ericsson AB surging 11% and Volvo AB up 0.9% after their quarterly sales beat estimates.

©2020 Bloomberg L.P.