Europe Shares Gain After Yellen Reiterates Rates to Rise Slowly

  • Yellen says Fed to proceed cautiously amid global growth risks
  • Stoxx 600 on course for first monthly rise since November

European shares advanced for a second day after Federal Reserve Chair Janet Yellen reiterated that interest rates will be raised gradually in light of uncertain global growth.

The Stoxx Europe 600 Index climbed 1.3 percent to 341.18 at the close of trading. Before yesterday’s advance, it had fallen for four consecutive sessions, signaling a loss of momentum in the rebound that more than halved its 2016 decline. It is on course for a 2.2 percent gain in March, its first monthly rise since November, paring its loss for the year to 6.7 percent from as much as 17 percent.

“Janet Yellen slapped down all the hawkish rhetoric that came out of the Fed in the wake of the last meeting,” said Michael Hewson, a London-based market analyst at CMC Markets Plc. “The markets are less worried about a rate rise in April, and the prospects of a potential rate rise in June have also receded ever so slightly as well, and that generally is giving markets a significant boost.”

Yellen said that it is appropriate for U.S. central bankers to “proceed cautiously” in raising rates. Her comments reassured investors speculating on the pace of increases after recent data, including stronger-than-forecast economic growth and consumer confidence, boosted the case for a hike. Traders have cut the odds of an April rate rise to zero, with the probability of a move in June down to 26 percent.

Commodity-related shares posted the biggest gain of the 19 industry groups on the Stoxx 600. Anglo American Plc led the advance with a 12 percent increase as Berenberg Bank said the miner seems to be positioning itself to attract a large corporate buyer. 

Energy companies rebounded as oil recovered. Seadrill Ltd. rose 5.8 percent after the offshore driller with the biggest debtload was said to have hired Houlihan Lokey Inc. and Morgan Stanley to advise it in negotiations on restructuring $11 billion of loans and bonds.

Metro AG jumped 12 percent after the German retailer said it’s preparing to split in two in a move aimed at boosting its value.

Thyssenkrupp AG, Germany’s largest steelmaker, climbed 8.3 percent after Berenberg Bank said that Tata Steel Ltd.’s possible disposal of its U.K. portfolio could trigger consolidation of the industry in Europe. ArcelorMittal added 3.6 percent.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE