European Stocks Rally on Earnings, BOE Move Spurs Losses in U.K.

Stoxx 600 Returns to Gains, BOE Fuels Pound Higher

European stocks advanced for the fifth time in six days as companies reported better-than-estimated earnings, while U.K. stocks declined after the Bank of England refrained from an interest-rate cut. 

The Stoxx Europe 600 Index rose 0.8 percent to 338.5 at the close, paring its losses since Britons voted on June 23 to leave the European Union to 2.3 percent. European shares are catching up with global equities that have already erased their post-referendum losses on optimism major central banks will step up stimulus to ward off any potential damage from Brexit. Sixteen of the 19 industry groups in the gauge climbed today, led by banks and automakers.

While the U.K. central bank disappointed investors who had expected a rate cut, minutes of its July 13 meeting showed most members expected policy easing in August. Investors speculate that Japan’s central bank may directly finance the government deficit, via so-called helicopter money. A rebound in oil prices on Thursday helped a gauge of European energy companies rise to the highest level since Nov. 4.

“A lot of fund managers are holding a lot of cash and they have to buy if markets go higher,” said Simon Wiersma, an Amsterdam-based investment manager at ING Bank NV, which manages 26 billion euros ($29 billion). “That’s why this may become one of the most hated rallies we’ve seen. Not that good, but certainly not bad enough not to join. Earnings were far better than expected and it seems Brexit thoughts were too negative.”

The FTSE 100 Index slid 0.2 percent in London, after rising as much as 1.1 percent.

Bank Stocks

A gauge of European banks rallied for the fifth time in six days. UniCredit SpA, the Italian lender that’s selling assets to boost capital, added 6.6 percent after Citigroup Inc. advised investors to buy the stock. SEB AB climbed 1.7 percent after the lender reported second-quarter profit that rose 15 percent, beating analyst estimates. Insurance firm Storebrand ASA rallied 2.9 percent after saying second-quarter premium income and net income both rose.

London-based recruitment company Hays Plc rose to a three-week high after saying full-year profits will beat market expectations. Germany’s Rheinmetall AG rose after Commerzbank AG upgraded the company on improved prospects for its defense unit.

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