Eurozone equities buoyed by outlook upgrade

[LONDON] Eurozone stock markets rose further Monday after Brussels lifted its official economic growth outlook for the region, but London gains were tempered by the stronger pound, according to analysts.

Benchmark indices in Frankfurt and Paris won 0.8 and 1.0 per cent respectively on news of the forecast upgrades, while London edged up 0.1 per cent compared with Friday's close.

Kicking off the day, Asian bourses built on a pre-weekend global rally after another record close Friday in New York, as traders welcomed President Donald Trump's promise of details on US tax reform which came alongside a softer tone over China and Japan.

"The eurozone led the way Monday... following news that the European Commission (EC) had raised its growth forecasts for the region as a whole," said Spreadex trader Connor Campbell.

Europe's economic recovery remains on track but vulnerable to the "exceptional risks" of Brexit and the new Donald Trump administration, the EU said on Monday.

Brussels raised its growth forecasts for the eurozone through to 2018 but warned that the European Union as a whole was navigating "choppy waters".

The 19-country eurozone will grow by 1.6 per cent in 2017 followed by 1.8 per cent in 2018, the EC said in its winter economic forecast.

That compared with its autumn predictions of 1.5 per cent in 2017 and 1.7 per cent in 2018.

Global shares had soared late last week after the new US president finally broke his silence over fiscal policy, saying he would unveil a "phenomenal" tax plan within three weeks.

That was followed by his affirmation that he recognises Beijing's "One China" policy towards Taiwan and that he had a positive weekend meeting with Japanese Prime Minister Shinzo Abe.

The developments provided some much-needed relief for traders who had grown increasingly worried about Mr Trump's outbursts against both countries' trade policies and his lack of detail on the domestic front.

"This is a big relief for investors given that Mr Trump's previous stance had raised serious foreign policy concerns, not to mention the prospect of severely damaged trade ties with the region and increased protectionism," said Oanda analyst Craig Erlam.

Adding to the positive mood was a forecast-busting reading on Chinese trade, which raised hopes a growth slowdown in the world's number two economy could be bottoming out.

Attention now turns to Federal Reserve boss Janet Yellen's two-day testimony to Congress this week, which will be pored over for clues about the bank's plans for monetary policy.

AFP