Picture: Dado Ruvic Picture: Dado Ruvic
London - European shares rose early on Wednesday after a five-day losing streak caused by jitters about next week's British referendum on European Union membership, with Zodiac Aerospace surging after posting higher sales.
The pan-European FTSEurofirst 300 index rose 1 percent, as did the pan-European STOXX 600 index. Both had fallen to their lowest levels in nearly four months on Tuesday and are down around 10 percent year to date.
Mining stocks were among the best performers, with Anglo American and Antofagasta up by more than 3 percent, as copper prices advanced.
Traders said the likelihood that the US Federal Reserve would keep interest rates unchanged on Wednesday was also helping to support stock markets, as lower rates reduce investors' returns on bonds and their appeal compared to stocks.
“It's a minor turnaround to the negative sentiment of the last few days, but there is a bit more risk appetite across the board, with the Fed's likely position lending a bit of support,” said Hantec Markets' analyst Richard Perry.
Zodiac shares rose 8.7 percent after the company reaffirmed financial targets for 2015/16 as it posted a 5.9 percent rise in nine-month revenues.
British housebuilders such as Berkeley and Taylor Wimpey fell after Berkeley said there was a 20 percent drop in reservations of new homes at the start of the year, due partly to concerns over the EU vote.
While betting odds still predict that the most likely outcome next week is that Britons will vote to stay in the EU, the gap between those backing an exit and their opponents seeking to stay has narrowed.
Economists have warned that leaving the EU would hurt the British economy. That possibility has hit sterling in recent months and the FTSE 100 has started to track the pound lower.
While sterling weakness could benefit the FTSE's international companies, it is also likely to impact domestic consumer confidence. A decision to leave is also expected to hit the broader European economy and markets.
Andreas Clenow, chief investment officer of ACIES Asset Management in Zurich, said he had “short” positions betting on a fall in European markets but was reducing the size of those bets given the uncertainty ahead of next week's Brexit vote.
“We're already in a bear market in Europe and fears over Brexit are adding further pressure and uncertainty to markets,” he said.
REUTERS
