EUROPE MARKETS: Stoxx Europe 600 Ends Higher, Scores Best Week In Almost 2 Years

By Carla Mozee and Sara Sjolin, MarketWatch

Fyffes shares shoot up after Sumitomo bid

European stocks rallied on Friday, with the benchmark index scoring a fifth straight day of gains as investors largely continued to cheer the European Central Bank's decision to extend its stimulus efforts.

The Stoxx Europe 600 index closed 1% higher at 355.38, marking its highest closing level since early January this year.

For the week, the pan-European benchmark rallied 4.7%, its strongest weekly performance since January 2015.

The sharp gain comes as the ECB on Thursday said it would continue to buy government bonds within the eurozone through December 2017, but scaled back the purchase amount to EUR60 billion a month, starting in April. The ECB currently buys EUR80 billion in bonds a month.

A streak of record highs in U.S. stocks (http://www.marketwatch.com/story/dow-set-to-stretch-out-record-run-with-5th-day-of-gains-2016-12-09) also helped lift sentiment in Europe.

"While equity markets, particularly financials, have greeted the measures from the ECB with enthusiasm it is not immediately clear whether the gains seen this week are a reflection of more confidence about the economic outlook, or merely a reflection that the ECB remains concerned about the fragility of the European economy, by its decision to extend QE to the end of 2017," Michael Hewson, chief market analyst at CMC Markets in a note.

Banks fall back: Banks across Europe logged solid gains after the ECB decision on Thursday, helping Stoxx Europe 600 Bank Index end the week 9.5% higher. That was its best week since December 2011.

However, the gain was tempered by a pullback in the sector on Friday, particularly in Italian shares.

Shares of Banca Monte dei Paschi di Siena SpA (BMPS.MI) slumped 11% after Reuters reported the ECB had rejected a request by the embattled lender for more time to raise capital (http://www.reuters.com/article/us-eurozone-banks-italy-montepaschi-excl-idUSKBN13Y1H0?platform=hootsuite).

Banca Popolare di Milano (PMI.MI) fell 4.3%, and Banco Popolare Societa Cooperativa (BP.MI) lost 3.9%. Spain's Bankia SA (BKIA.MC) ended 2.3% lower, and Deutsche Bank AG (DBK.XE) (DBK.XE) shed 3%.

German exporters: Germany's exporter-heavy DAX 30 equity index rose 0.2% to 11,203.63, its highest closing level in a year.

German stocks benefited from a slide in the euro after the ECB decision. On Friday, the shared currency was buying $1.0539, compared with $1.0602 late Thursday in New York.

For the euro, it is "really a case of waiting for next week's [Federal Reserve] verdict now and although we're still some considerable way from parity...if Janet Yellen paints a hawkish picture for 2017 then further losses here should be anticipated," Cross wrote.

U.S. Federal Reserve policy makers, including Chairwoman Janet Yellen, will meet December 13 to 14.

Movers: Sky PLC (SKY.LN) rocketed 27% late in the session after 21st Century Fox Inc. (FOX) (FOX) reached a preliminary deal to buy the rest of Sky that it doesn't already own (http://www.marketwatch.com/story/fox-strikes-preliminary-deal-to-buy-rest-of-sky-for-1075-a-share-2016-12-09).

Electrolux AB shares (ELUXY) rose 3.8% after the appliance maker said it expects moderate growth in its largest markets (http://www.marketwatch.com/story/electrolux-warns-on-drop-in-latin-american-demand-2016-12-09)of Europe and North America next year. But it also warned that continued economic pressures in Latin America will see demand there fall by around 5%.

Gemalto NV shares (GTO.AE) climbed 6.3%. The digital security firm is buying 3M Co.'s (MMM)identity-management business for $850 million (http://www.marketwatch.com/story/gemalto-to-buy-3ms-id-management-business-2016-12-09), 3M said Thursday.

Off the main index, shares of Fyffes PLC (FQ3.DB) rallied 49% after the Dublin-based banana distributor said it is being purchased by Japan's Sumitomo Corp. (8053.TO) for EUR751.4 million.

Indexes: Italy's FTSE MIB index fell 0.7% to 18,292.65, but jumped 7.1% for the week.

The gains came after Italian bank shares rose on the prospect that a rescue plan is being crafted for troubled lenders. The FTSE Italia All-Share Bank Index dropped 2.3% Friday, but ended with a 13% weekly climb.

Italian assets have been in focus this week after voters rejected Prime Minister Matteo Renzi's plans for constitutional reform. Renzi submitted his resignation after the defeat, but has been asked to stay on in a caretaker role, media reports said.

France's CAC 40 rose 0.6% to 4,764.07, and the U.K.'s FTSE 100 picked up 0.3% to 6,954.21.

(END) Dow Jones Newswires

December 09, 2016 12:11 ET (17:11 GMT)

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