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(Alliance News) - Stock prices in Europe were on the front foot on Friday, boosted by a promising eurozone consumer confidence reading as well as the report of a big US spending plan to be outlined by President Joe Biden later Friday.
In London, the blue-chip FTSE 100 was helped by gains for banking stocks. The mid-cap index, however, faced pressure from the pub sector, on concerns about the spread of the Indian Covid-19 variant in the UK.
The FTSE 100 index was up 17.70 points, or 0.3%, at 7,037.37 midday Friday. The FTSE 250 index was up 75.05 points, or 0.3%, at 22,734.09. The AIM All-Share index was up 2.78 points, or 0.2%, at 1,253.26.
The Cboe UK 100 index was up 0.4% at 701.47 points. The Cboe 250 was up 0.2% at 20,467.18, and the Cboe Small Companies was down 0.1% at 14,963.99.
In mainland Europe, the DAX 30 in Frankfurt was up 0.5%, on track for another record close, and the CAC 40 in Paris was up 0.6%.
"Rising eurozone economic sentiment and the prospect of further stimulus in the US have boosted the mood in the markets on Friday, helping European stocks inch towards record highs," OANDA analyst Sophie Griffiths commented.
Consumer confidence in the eurozone rose in May, the fourth monthly improvement in-a-row, as Europeans eye a return to relative normality after months of Covid-19 restrictions.
According to figures posted by the European Commission, the consumer confidence index improved to minus 5.1 points, in line with market forecasts, from minus 8.1 points in April. The index now sits a far cry away from its January tally of minus 15.5 points.
Sterling was quoted at USD1.4177 midday Friday, down from USD1.4181 late Thursday. The euro stood at USD1.2181, down from USD1.2200 at the European equities close on Thursday.
Against the yen, the dollar was trading at JPY109.89, improved from JPY109.71.
Enthusiasm for Biden's expected Federal budget plan also boosted stocks. The New York Times on Thursday reported Biden will propose a USD6 trillion budget that would take the US to its highest sustained levels of federal spending since World War II.
The spending plan will follow data on Thursday that showed initial jobless claims in the US fell to a new pandemic low.
"The prospect of large-scale spending and faster growth at a point when the economic recovery is in full swing is driving risk sentiment and the recovery trade. Investors remain firmly focused on the re-opening story with little regard for the US deficit right now," OANDA's Griffiths added.
Inflationary pressure has not been forgotten, however, Griffiths added. Traders are looking to the April personal consumption expenditures price index release at 1330 BST.
Data on Thursday showed personal consumption expenditure prices rose 3.7% in the first quarter of 2021, upped from the previous estimate of 3.7% quarter-on-quarter.
Market estimates for April are for a 2.2% annual hike and 0.6% monthly growth.
US futures were higher on Friday ahead of the data. The Dow Jones Industrial Average was called up 0.5%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.3%.
In London, banking stocks helped lift the FTSE 100, after a prominent policymaker from the Bank of England on Thursday indicated a UK interest rate hike could happen next year.
Speaking at the University of Bath, Monetary Policy Committee member Gertjan Vlieghe said an early interest rate hike is possible if there is smooth transition of workers from furlough into employment.
NatWest shares were up 1.2%, while HSBC rose 1.6%. Higher interest rates mean a better net interest margin for lenders.
The mid-cap FTSE 250 squeezed out gains despite pub firms struggling. JD Wetherspoon fell 2.1%, while All Bar One-owner Mitchells & Butlers dropped 3.4%. Away from the mid-caps, Fuller, Smith & Turner shed 2.8% and Young & Co's fell 1.4%.
The next few weeks will be crucial in determining whether coronavirus restrictions in England can be lifted next month, experts have said.
Current data suggests that although hospital admissions are rising in some parts of the country affected by the Indian variant, overall admissions remain broadly flat.
UK Prime Minister Boris Johnson told reporters on Thursday he "didn't see anything currently in the data" to divert from the June reopening target, adding: "But we may need to wait."
IG Markets analyst Joshua Mahony commented: "Airlines are typically the ones who feel the brunt of such concerns, with international travel always seemingly at risk as nations raise barriers in a bid to stave off the spread of any more contagious variants. However, today has seen much of that pressure focused on pubs and restaurant groups."
Airline stocks were slightly higher. Spain, with its popular tourist hotspots, so far has opting not to follow France and Germany in tightening restrictions on UK arrivals.
British Airways-parent International Consolidated Airlines Group rose 0.8%, easyJet was up 1.7% and Ryanair shares were 0.8% higher.
Brent oil was trading at USD69.49 a barrel midday Friday in London, up from USD68.93 late Thursday. An ounce of gold fetched USD1,893.72, up slightly from USD1,891.30.
By Eric Cunha; ericcunha@alliancenews.com;
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