European stocks nudge higher as stimulus hopes outweigh virus woes

By Sruthi Shankar

(Reuters) – European stocks inched higher on Wednesday as hopes of additional stimulus for Germany and France outweighed worries about rising cases of COVID-19 across the continent.

Germany’s coalition parties agreed to extend economic measures to cushion the effects of the coronavirus crisis at a cost of up to 10 billion euros, including prolonging a short-time work scheme and a freeze on insolvency rules.

Neighbouring France is also set to present its economic recovery plan on Sept. 3, Prime Minister Jean Castex said.

Still, Frankfurt’s DAX (GDAXI) rose 0.2% and Paris’ CAC 40 (FCHI) was flat, with global markets in a holding pattern ahead of the U.S. Federal Reserve Chairman Jerome Powell’s speech on Thursday that could offer clues on what steps the central bank is willing to take to safeguard a fragile economic recovery.

“The market is eager for guidance on how the Fed might push inflation higher and what that means for monetary policy going forward,” wrote Russ Mould, investment director at AJ Bell.

The pan-European STOXX 600 index (STOXX) rose just 0.1%, held back by fears after two confirmed cases of coronavirus re-infections in Europe raised concerns about people’s immunity to the virus.

Economic data in the past week has muddled the outlook for a euro zone recovery, keeping the STOXX 600 about 15% below its all-time high, even as U.S. stocks hit new peaks on easing U.S.-China trade tensions and hopes of a coronavirus treatment.

“We’ve had a disappointing set of flash PMIs last week, which gives you an impression that after the initial rebound, the recovery is going to stall,” said Andrea Cicione, head of strategy at TS Lombard.

Individual stock moves were mixed, with Swedish radiation therapy equipment maker Elekta (ST:EKTAb) jumping 13.1% after a bigger-than-expected first-quarter profit.

Ambu (CO:AMBUb), which makes diagnostic and life-support devices for hospitals, slumped 12.9% after it cut its full-year earnings forecast.

HiQ International (ST:HIQ) soared 26.5% after private equity firm Triton announced a 3.9 billion crown ($444.92 million) cash bid for the Swedish IT consultancy firm.

Telecom Italia (MI:TLIT) rose 3.7% after a local newspaper reported the Italian government had given approval to U.S. investment firm KKR (N:KKR) to buy a minority stake in its secondary grid.