European shares build on recovery
European stocks rose for a second day yesterday as investors brushed off a spike in US inflation, turning their focus back to company earnings from heavy hitters including Europe's largest aerospace firm Airbus .
The pan-European STOXX 600 ended up 0.5pc at its highest level in a week, though the main European stock index was still down 6.7pc from a 2-1/2-year peak hit as recently as January 23. Cyclical sectors drove the market higher, with basic resources, industrials, banks and technology stocks the best performers, recovering from their sharp drop last week.
The rapid recovery from a higher-than-expected rise in US inflation reported on Wednesday took some by surprise, and investors said the bounce back indicated underlying strength in the market.
"For me it's a clear indication that inflation is not as big a threat as people made it out to be over the past couple of weeks," said Lukas Daalder, chief investment officer at Robeco in Rotterdam. "The trend behind the market is still very strongly pointed upwards," Mr Daalder added. "2017 was a very momentum-driven market, and if that's still the case, which after yesterday it appears to be, then we will probably see new highs before too long."
Earnings took centre stage with strong results driving the top gainers Airbus, Ipsen, Aegon, and Schneider Electric. Airbus shares jumped 10.3pc after Europe's largest aerospace firm beat profit and earnings expectations, though it booked a new €1.3bn charge on its A400M military plane.
Schneider Electric rose 3.4pc after the electrical equipment producer reported a strong profit margin despite headwinds. (Reuters)