European Stocks Rise for 5th Day in Biggest Rally Since 2015

  • Italy’s FTSE MIB Index jumped the most since 2011 this week
  • Stoxx 50 Index closed 0.7 percent short of bull market

European Stocks Complete Full Week of Gains

European stocks on Friday extended their biggest weekly rally in almost two years amid supportive policies from the European Central Bank. The Stoxx Europe 600 Index added 1 percent, while the Euro Stoxx 50 Index closed within 0.7 percent of a bull market.

Italy’s FTSE MIB Index fell 0.7 percent, after its biggest three-day jump since July. Gains in its lenders boosted the benchmark in previous sessions as the ECB expanded the parameters of its asset-buying program in a move that would help bank profitability. While Stoxx 600 lenders also halted a winning streak, they still completed the biggest weekly advance since 2011.

  • The Euro Stoxx 50 closed at its highest level in almost a year, up 19.3 percent from its February low. The Stoxx 600 is about 3 percent away from a bull market.
  • So-called defensive shares recovered on Thursday after losses earlier in the week, while equities seen benefiting from economic growth trimmed gains from previous sessions. Drugmakers, real estate and media companies led gains in the Stoxx 600, while banks and miners trailed.
    • Sky Plc led gains in media shares, surging a record 27 percent after 21st Century Fox Inc. reached a preliminary deal to acquire full control of the company for 11.2 billion pounds ($14.1 billion).
  • Despite the strong rally since Italy’s referendum, European shares have not yet attracted fresh investment. The region’s equity funds saw outflows of $1 billion in the week to Dec. 7, a report from Bank of America Corp.’s Merrill Lynch unit showed. Investors have withdrawn about $100 billion from such funds this year.
  • Technical analysis charts show signs of overheating in European stocks, with the Stoxx 600’s relative strength index rising above 70, signaling it’s in overbought territory. A pullback below that threshold could trigger more declines. The gauge of lenders yesterday reached its most overbought level in almost three years.
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