Sept 17 (Askume) – European shares rose to a two-week high on Tuesday, supported by financial stocks, as markets inched closer to expectations that the Federal Reserve’s monetary easing cycle will begin, with policy makers likely to cut interest rates sharply.
Continental Europe’s Stoxx 600 index (.STOXX) rose 0.5% to 517.74, and Britain’s FTSE 100 index (.FTSE) outperformed its European peers, rising 0.7%.
All sectors were higher, with basic resources (.SXPP) adding nearly 1%, as dollar-denominated copper gained marginally on the back of a weaker dollar and expectations of a US interest rate cut.
Banking stocks (.SX7P) and travel stocks (.STP) also boosted the market, rising 0.8% each.
Investors will focus on the Federal Reserve’s decision on Wednesday. The market is currently estimating a 67% chance that the Federal Reserve will cut interest rates by 50 basis points.
Yvan Mamlet, senior economic strategist at SG Kleinwort Hambros, said: “I think there is some volatility and nervousness in the market about the growth environment and perhaps politics. But overall, it has to do with the central bank’s decision.”
“I think it’s not just the Fed. I think the Bank of Japan’s decision this weekend — the communication — is also creating uncertainty and perhaps tension.”
Markets will closely watch the German confidence survey at 0900 GMT, which is expected to have worsened slightly in September, and US retail sales at 1230 GMT, which are expected to have contracted on a monthly basis in August.
ECB Director Claudia Bucher and board members Elizabeth McCall and Frank Alderson will deliver speeches later in the day.
Among individual stocks, Kingfisher (KGF.L) was the top gainer. The European home improvement retailer raised the lower bound of its full-year profit forecast , and its share price rose 7.1%.
Barry Callebaut (BARN.S) rose 7% after Barclays upgraded the stock to “overweight” from “underweight.”
Sweden’s Thule Group (THULE.ST) fell 6.7% after lower second-quarter revenue and rising debt , leaving it at the bottom of the STOXX 600 index.
Playtech (PTEC.L) fell 2.3% after the British gaming technology company agreed to sell its Italian unit Snaitec to Flutter Entertainment, the world’s biggest gaming company, for 2.3 billion euros ($2.56 billion) including debt.
Flutter shares rose 0.8%.
