European stocks climb despite slowing economic recovery

European stocks continued their ascent on Friday morning despite sustained uncertainty about the continent’s economic recovery and rising coronavirus infections.

The region-wide Stoxx 600 was up 0.2 per cent by mid-morning while London’s FTSE 100 advanced 0.6 per cent and France’s Cac 40 edged up 0.3 per cent. European equities also advanced on Thursday, with major bourses trading around their highest level in almost three weeks.

The moves higher came despite indications that the continent’s economic recovery had slowed to a crawl. Data released on Friday showed that UK economic output grew slower than expected in August, rising 2.1 per cent month-on-month compared with expectations by analysts polled by Reuters for a 4.6 per cent increase. In France, industrial production rose 1.3 per cent in August, according to Insee, below expectations for a 1.7 per cent increase.

UK gross domestic product was nearly 10 per cent below its pre-Covid-19 February level despite the loosening of coronavirus curbs, “underlining that the recovery has not been V-shaped”, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

James Smith, developed markets economist at ING, said the UK’s recovery “looks set to stall in the fourth quarter as fresh virus measures loom” while infections rise.

In the Asia-Pacific region, China’s onshore renminbi, which has not moved for six trading days thanks to the lengthy National Day holiday, rose as much as 1.2 per cent on Friday to Rmb6.7091 per dollar. That marked the currency’s biggest intraday increase against the greenback since February 2016.


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