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European stocks set for fourth straight week of gains By Reuters


© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 12, 2021. REUTERS/Staff

By Sruthi Shankar

(Reuters) -European stocks scaled new highs on Friday and were on track for their fourth consecutive week of gains on optimism over a strong earnings season and steady recovery from the pandemic-led economic downturn.

The pan-European index inched up 0.2% to 475.51, hitting a record high for the tenth straight session.

While the pace of gains has slowed due to thin summer trading, the last time it posted a 10-day winning streak was in December 2006. The index has logged nine-day gaining streaks seven times in the past fifteen years.

Both European and U.S. stocks hit record levels this week, supported by rising earnings expectations and improving economic data, even as Asian equities were held back by worries about Chinese regulation and the fast-spreading Delta variant of the coronavirus.

Meanwhile, speculation that the U.S. Federal Reserve could soon start to unwind its bond buying stimulus calmed a bit following tame U.S. consumer prices data this week.

Focus will be on the minutes from the U.S. central bank’s last policy meeting for clues on the outlook for monetary policy. The minutes will be announced next week.

“With equity markets almost doubling since the start of the pandemic and a bull market lasting over a decade, investors are questioning how far the bull market can rally,” said Geir Lode, head of global equities at the international business of Federated Hermes (NYSE:).

“With higher inflation and regulatory risk we believe value stocks will outperform growth stocks,” said Lode, adding that he expects stronger earnings growth among mid-cap and smaller companies versus the mega-cap growth companies.

The recent gains lifted Germany’s blue-chip to a record high, 40 closest to its life-high hit in 2000 and UK’s to its highest since February.

Italian shares were also trading near their highest since September 2008.

Adidas (OTC:) rose 1.8% after it said it was selling Reebok to Authentic Brands Group for up to 2.1 billion euros ($2.5 billion).

Pet supplies retailer Zooplus shot up 40.2% after it accepted a takeover offer worth around 3 billion euros ($3.5 billion) from U.S. private equity firm Hellman & Friedman.

French healthcare company Ipsen tumbled 11.4% after it withdrew a U.S. application for palovarotene, its treatment for an extremely rare disease that causes muscles and tissue to turn to bone.

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