(Bloomberg) -- European equities gained as a solid advance in US payrolls soothed worries about the health of the American labor market, while French stocks rallied after President Emmanuel Macron pledged not to resign.
The Stoxx Europe 600 Index ended the session 0.2% higher at a seven-week peak. Data showed the US job market returned to health last month after a storm- and strike-constrained October. The figures support the Federal Reserve’s view that it remains solid yet no longer a big source of inflation.
“One of big questions for the market is whether the Fed will be able to deliver the rate cut investors expect and these numbers are just spot-on for a soft landing scenario,” said Benoit Peloille, chief investment officer at Natixis Wealth Management.
Consumer products and automotive shares led gains while resources-related sectors were laggards. Among individual movers, Direct Line Insurance Group Plc surged after Aviva Plc reached a preliminary agreement to acquire the UK motor insurer.
Meanwhile, France’s CAC 40 blue-chip index outperformed its European peers with a rise of about 1.3% as optimism grew that the nation’s fractious parliament would eventually strike a deal on the budget. The benchmark notched its seventh straight session of gains, its longest run since February.
“It’s kind of a relief rally,” Gilles Guibout, head of European equities at AXA IM, said of this week’s rebound. “The fact that nearly all the stocks of the CAC 40 are rising, strongly suggests that these are investors taking broad bets on France rather than stock-picking the dip.”
French stocks’ rebound follows a six-week long losing streak as political risks mounted, culminating in the government’s collapse on Wednesday. The Paris market is still set for its worst performance against European peers since 2010.
David Kruk, head of trading at La Financiere de L’Echiquier in Paris, said one factor lifting French stocks is that speculators are buying back bets made against French securities in recent weeks. “There’s some buying back but there are no fundamentals upwards,” he said.
Overall, European stocks have struggled to regain their form since peaking in September, but monetary-policy support could be on the way. The latest Bloomberg survey showed that the European Central Bank will cut interest rates more rapidly than previously anticipated amid lower inflation and weak economic growth.
Barclays analysts predict better performance next year should French political risks ease and the ECB opens the door to more interest-rate cuts. A catch-up with Wall Street is under way, they told clients.
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--With assistance from Kit Rees.
(An earlier version of this story corrected the date of the French government’s collapse.)
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