BOE's Carney says 'not yet the time' to hike rates, aiding U.K. blue chips
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European stocks edged higher, aided by gains for consumer-related shares, while U.K. blue-chips got a lift from Bank of England Governor Mark Carney's comments on interest rates.
The Stoxx Europe 600 was up 0.2% at 392.66, modestly building on gains logged Monday that left the index at its highest since June 5. Consumer services and consumer goods shares led the advancers Tuesday, while basic material and oil and gas shares sagged.
Aiding consumer shares was the prospect that borrowing rates in the U.K. are set to stay at a record low for the foreseeable future. BOE chief Carney said in his delayed Mansion House speech in London Tuesday (http://www.marketwatch.com/story/boe-chief-carney-too-early-to-lift-interest-rates-2017-06-20) that "now is not yet the time" to begin to lift the bank's key interest rate from its current 0.25%.
"It would appear that the BOE chief wants to keep monetary policy loose as there is so much uncertainty surrounding the Brexit negotiations, which started yesterday," said David Madden, analyst at CMC Markets UK, in a note.
"Some traders feel that Mr. Carney was too aggressive in his easing of monetary policy in the awake of Brexit, and now it seems that he doesn't want to increase interest rates in case he has to cut them again."
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Read Brett Arends: Brexit threatens to become a fiasco -- and investors are in denial (http://www.marketwatch.com/story/brexit-threatens-to-become-a-fiasco-and-investors-are-in-denial-2017-06-19)
And check out:Forget Trump and Brexit -- this is what elite fund managers are watching (http://www.marketwatch.com/story/this-is-what-elite-fund-managers-are-watching-closely-and-its-not-trump-or-brexit-2017-06-19) (http://www.marketwatch.com/story/brexit-threatens-to-become-a-fiasco-and-investors-are-in-denial-2017-06-19)
Carney's comments helped pull the U.K.'s FTSE 100 out of the red (http://www.marketwatch.com/story/ftse-100-flips-higher-as-central-bank-boss-wants-rates-held-steady-2017-06-20) for a rise of 0.2% to 7,541.16. At the same time, the British pound fell below $1.27 (http://www.marketwatch.com/story/pound-slides-to-1-week-low-after-boes-carney-dashes-hopes-of-a-rate-hike-2017-06-20).
Consumer cheer: On both the FTSE 100 and the Stoxx 600, shares of home builder Persimmon PLC (PSN.LN) gained 1.8% and rival Taylor Wimpey PLC (TW.LN) picked up 1.3%.
Elsewhere in the consumer goods sector, shares of German lighting manufacturer Osram Licht AG (OSR.XE) marched up 3.2%, to top the Stoxx 600. The move came after a ratings upgrade to buy at Bankhaus Lampe, according to Dow Jones Newswires.
Techs appeal: Meanwhile, the Stoxx Europe 600 Technology Index tacked on 0.5%, keying off advances for the tech sector Monday on Wall Street (http://www.marketwatch.com/story/dow-industrials-poised-for-a-fresh-record-while-tech-stocks-shape-up-to-rebound-2017-06-19). The upbeat tone for techs contrasts with recent pain in the sector, as questions over valuations prompted investors to yank shares of Apple Inc. (AAPL) and Facebook Inc. (FB) sharply lower, with the impact spilling over into the European tech sector.
Stock movers: Barclays PLC (BCS) (BCS) was down 0.2% after the U.K. Serious Fraud Office charged the bank and four former executives with conspiracy to commit fraud (http://www.marketwatch.com/story/barclays-4-former-top-execs-charged-with-fraud-2017-06-20) in a case related to fundraising in Qatar during the financial crisis.
Indexes: Germany's DAX 30 was up 0.30% at 12,933.25. France's CAC 40 gained 0.4% to 5,334.14, still buoyed by the weekend's elections, when French President Emmanuel Macron's party won a parliamentary majority.
Economic data: The eurozone's current account surplus narrowed to 22.2 billion euros in April (http://www.marketwatch.com/story/eurozone-current-account-surplus-narrows-2017-06-20).
(END) Dow Jones Newswires
June 20, 2017 05:41 ET (09:41 GMT)