Europe Shares Rise on Yellen’s U.S. Reassurance, Signs of Growth

Stoxx 600 Rallies, Climbs Most in 2 Weeks
  • Yellen keeps faith in economy, doesn’t give rate timeframe
  • Energy producers jump as oil advances from 10-month high

European shares rose the most in two weeks as Federal Reserve Chair Janet Yellen reiterated her faith in U.S. growth, while indicating that interest rates won’t be prematurely raised. Signs of economic progress in Europe also helped gains.

The Stoxx Europe 600 Index climbed 1.1 percent to 346.26 at the close of trading. Germany’s DAX Index was among the best performers of western-European markets after data showing a rebound in industrial production in April indicated the region’s largest economy is benefiting from a pick-up in investment. The euro-area economy grew faster than previously estimated at the start of the year, according to a separate report from the European Union’s statistics office.

“Investors know that June is out of the equation with respect to a U.S. rate hike on the back of Janet Yellen’s speech yesterday,” said Naeem Aslam, a market analyst at TF Global Markets UK Ltd. “Economic conditions are improving in the euro zone. German industry output data has also improved the sentiment.”

Yellen yesterday repated her belief that the U.S. economy still has forward momentum and that consumers could provide a significant step up in spending this quarter to propel overall growth. She was silent on the timing of the next rate increase, playing down a June move and raising doubts about July.

The central bank will announce its next rate decision on June 15. Traders are now pricing in zero chance of an increase this month -- down from 22 percent before disappointing payroll data on Friday -- and a 20 percent probability in July. December is the first month with more than even odds for a move.

After falling as much as 5.4 percent from an April 20 high, European shares regained momentum at the end of May, before stumbling last week amid resurgent worries about global growth. Shares yesterday rebounded as energy and raw-material producers advanced. The Stoxx 600 is still down 5.3 percent this year. 

Greece’s ASE Index jumped 2.3 percent today, for the best performance among western-European markets, as the European Commission said the nation is making progress on implementing the measures needed to complete a review of its bailout program. Italy’s FTSE MIB Index surged 2 percent as domestic banks climbed.

Total SA and Royal Dutch Shell Plc rose at least 3.1 percent, leading a gauge of energy companies to the biggest advance of the 19 industry groups on the Stoxx 600, as crude extended gains from a 10-month high. Lundin Petroleum AB jumped to its highest price since February 2013. Banks in peripheral nations pushed a measure of lenders ahead, with Banca Popolare di Milano Scarl rising 7.6 percent. 

Among stocks moving on corporate news today, Burckhardt Compression Holding AG slid 7.8 percent -- the most in a year -- after Vontobel Holding AG said the company’s outlook signaled a sharp decline in margins.

(An earlier version of this story corrected the direction of Burckhardt Compression’s share move in the last paragraph.)

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