European stocks hold firm near record highs

(Reuters) – European stocks held firm on Monday near record highs scaled earlier this month, as hopes that continued central bank support would sustain an economic recovery offset woes over rising Delta COVID-19 variant cases.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany August 24, 2021. REUTERS/Staff

UK markets were closed for a bank holiday, while Germany’s DAX and France’s CAC 40 were up about 0.1% in morning trading.

The Europe-wide STOXX 600 traded flat but was on course to end August with a more than 2% rise – its seventh straight month of gains in what would be its longest such winning run in over eight years.

Risky assets including equities remained supported after U.S. Federal Reserve Chairman Jerome Powell on Friday explained why there is no rush to tighten monetary policy, and offered no signal on when the central bank plans to cut its asset purchases beyond saying it could be “this year.”

“For equity markets, the gradual process is positive, because it is clear the Fed wants to continue to support the economy for as long as needed to achieve a full recovery,” said Willem Sels, chief investment officer of private banking and wealth management at HSBC.

“It is therefore no surprise that cyclical sectors reacted most positively to the news.”

Oil and gas stocks inched up 0.2% even as crude prices retreated from three-week highs after a powerful hurricane slammed into the U.S. Gulf coast, forcing shutdowns and evacuations of hundreds of offshore oil platforms. [O/R]

Automakers, technology and retail were among the top sectoral gainers.

After hitting record highs in mid-August, European stocks have struggled to reclaim the highs on worries about tighter regulation on Chinese tech firms and as a resurgence in COVID-19 cases prompt fresh lockdowns in parts of the world.

A study showed people who get the Delta variant of the coronavirus are twice as likely to be hospitalised as those who were infected by the Alpha variant.

However, the European Central Bank expects the more contagious variant to have a limited impact on the euro zone economy due to an advanced vaccination campaign.

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