(Bloomberg) -- European equities rose as a report showed the euro area’s economy grew more than expected last quarter, with investors looking ahead to central bank interest-rate decisions this week in the US and UK.
The Stoxx Europe 600 Index gained 0.5% by the close. Construction, industrial goods and insurance stocks gained the most, while miners underperformed as iron ore and copper prices fell. Gross domestic product expanded by 0.3% in the three months through June, helped by resilience in France and Spain while Germany contracted.
Among individual movers, Standard Chartered Plc jumped after the lender expanded its buyback program. BP Plc was little changed by the close after earlier rising as much as 3.3% as it maintained the pace of its share buybacks and increased its dividend. Shares in Diageo Plc fell after the British distiller posted its first annual sales decline since the pandemic.
European stocks are up less than 1% this month as hopes for further rate cuts have been offset by mixed economic data and guidance cuts from some of the region’s biggest companies. Investors are awaiting results from Microsoft Corp. after the US market close to see whether a recent selloff in the technology sector can be reversed.
Other crucial events this week include the Federal Reserve’s decision due Wednesday, when policy is likely to be unchanged. But all eyes will be on Chair Jerome Powell for any signals that the central bank is gearing up for interest rate reductions. Policymakers will also be looking at Friday’s US jobs report for clues about the health of the economy.
The Bank of England will meet on Thursday, and it might lower rates for the first time in over four years. The BOE will present new inflation and growth forecasts alongside the decision that economists predict could be a tight, five-to-four vote for a cut.
“European companies are missing top-line estimates due to persistent weak demand, with many sectors citing weakness in China and the US, hence several guidance cuts.” said Susana Cruz, a strategist at Panmure Liberum. “The key developments will be around the narrative of central banks this week, with the BOE perhaps a little bit closer to cuts and the Fed with few reasons to start cutting rates.”
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--With assistance from Sagarika Jaisinghani and Rheaa Rao.
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