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Europe Markets: European stocks rise as euro eases and after Wall Street notches new records

Europe Markets

U.S. stock futures point to gains on Wednesday

The bear and bull statue stand outside the Frankfurt Stock Exchange, operated by Deutsche Boerse AG, in Frankfurt, Germany, on Monday, Aug. 31, 2020.

Alex Kraus/Bloomberg News

European stocks gained on Wednesday, as the euro pulled back from a two-year high and Wall Street logged another bullish session.

The euro

fell 0.4% against the dollar to $1.1870 after sprinting past $1.20 on Tuesday to the stongest level since May 2018.

The Stoxx Europe 600 index

jumped 1.3% after dropping 0.3% on Tuesday. The German DAX

and French CAC 40

each gained 1.4% and the FTSE 100

rose 1.5%.

A pullback for the euro was attributed to comments by Philip Lane, chief economist at the European Central Bank,  who said “the euro-dollar rate does matter.”

“If there are forces moving the euro-dollar rate around, that feeds into our global and European forecasts and that in turn does feed into our monetary policy setting,” Lane reportedly said in an online conference Tuesday evening, according to Bloomberg.

“These comments constitute the first pushback against appreciation in this EURUSD cycle and does not come as a surprise. However, our central case remains that the ECB will stick to verbal intervention, rather than cut the deposit facility rate,” said Gizem Kara, economist at BNP Paribas in London, in a note to clients.

The economist said “risk-reward of cutting is not favorable right now” and if the market perceives the ECB has used up its firepower, the currency could even rise.

Data released Tuesday showed eurozone consumer prices dropping in August for the first time in four years.

Elsewhere, investors were moving back into stocks after the Nasdaq Composite

and S&P 500

closed at record highs on Tuesday, helped by upbeat economic reports and gains for big tech companies. Momentum showed no signgs of slowing Wednesday with S&P 500 futures

rising 0.6% and Nasdaq-100 futures

up nearly 1%.

In Europe, shares of German business software group SAP SE


rose 1.4%, while those of semiconductor equipment maker ASML Holding NV


rose 1.8%.

Heavily weighed pharmaceutical shares also drove the gains, with Roche Holding AG

up 1.8% and AstraZeneca PLC

rising 1.6%.

Shares of Barratt Developments PLC

were near the top of the Stoxx 600’s biggest gainers, up 6.4%. The U.K. housebuilder said profit almost halved in fiscal 2020 due to the pandemic.

But Richard Hunter, head of markets at Interactive Investor, said the company had “been performing strongly prior to the pandemic, and there are some signs that a recovery is already in place following the full opening of its sites at the end of June .

Also, the latest survey from Nationwide Building Society showed U.K. annual house price growth picked up to 3.7% in August to reach a new all-time high.

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