European Stocks Rise on Easing Oil Prices Despite Mideast Risks
European stocks are poised to end their three-week losing streak as oil prices ease. The pan-European STOXX 600 index rose by 0.6% to 640.43 points on Friday, putting it on track for a nearly 1% weekly gain.
The benchmark had lost around 3% in the previous three weeks. Oil prices retreated as hopes of a truce in the Middle East outweighed Houthi attacks on Saudi Arabia. Negotiators are exploring a phased path out of war that would involve Tehran reopening the Strait of Hormuz and Washington lifting its economic blockade of Iran.
Even though there's a glimmer of hope for dialogue and agreement, uncertainty remains due to past disappointments. Energy shares fell by 0.7%, while airline stocks advanced with Ryanair and Lufthansa gaining over 2% each.
The travel and leisure index rose by 1.2%. Basic resource shares also gained, with Pan African Resources and Glencore PLC leading the way. UBS upgraded its rating on Glencore to 'buy' from 'neutral'. However, euro zone government bond yields are still on track for their seventh consecutive weekly rise due to high crude prices and hawkish central bank signals.
Further tightening by the European Central Bank could be damaging for the economy, said Daniela Hathorn of Capital.com. The ECB lifted interest rates earlier this month, and growth is not in its best position in the eurozone.