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European Stocks Cling to Gains as Trump Plans Emergency Measures

Published 13/03/2020, 17:03
Updated 13/03/2020, 17:22
European Stocks Cling to Gains as Trump Plans Emergency Measures

European Stocks Cling to Gains as Trump Plans Emergency Measures

(Bloomberg) --

European equities all but gave up gains on Friday after a report that U.S. President Donald Trump plans to declare a national emergency over the virus outbreak overshadowed optimism on policy responses in Europe.

The Stoxx 600 Index ended the session with up 1.4%, after earlier rallying as much as 8.8% as Germany pledged to spend “billions” to help cushion the blow from the pandemic. Trump plans to declare a national emergency, invoking an act that will open the door to more federal aid for states and municipalities, people familiar with the matter said, before a scheduled news conference at 3 p.m. in Washington.

The Italian FTSE MIB Index was an outperformer, though it more than halved earlier gains. Germany’s DAX Index was up 0.8% after briefly erasing gains that reached 9% at one point. Travel and leisure stocks were the biggest decliners, down 2.4%, on worries over the impact of restrictions on freedom of movement on businesses.

“Until volatility starts coming down, we recommend investors maintain a cautious stance,” Alastair Pinder, a global equity strategist at HSBC Securities, said by phone. “We remain cautious on Europe and despite the sell-off, it’s not the right time to be going into buying European equities.”

European stocks plummeted the most on record on Thursday, after a U.S. travel ban and an underwhelming European Central Bank response did little to calm investors seeking a strong, coordinated effort to deal with the pandemic’s impact on global growth.

Indications from Germany that it will abandon its long-standing balanced-budget policy if necessary appeared to help sentiment earlier today, while a European Union executive said the bloc is ready to trigger a crisis clause allowing fiscal stimulus.

Among notable movers, Roche Holding (SIX:ROG) AG advanced after the Swiss drugmaker won approval from the U.S. government for a highly automated coronavirus test.

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