European Stocks Edge Higher on Gold Rally but Remain on Track for Weekly Losses
European stocks edged slightly higher during Friday's trading, supported by a rally in gold prices. However, they remained on track to post weekly losses as investors assessed ongoing pressures in global bond markets. Additionally, a diplomatic stalemate in the Gulf region pushed oil prices higher, sparking inflation concerns.
The pan-European STOXX 600 index rose 0.2% to 652.03 points by 08:26 GMT, heading for its second consecutive weekly decline.
Gold Leads Gains
The basic resources sector led European sectoral gains, advancing 2.2%, as gold prices climbed supported by a weaker dollar.
European markets have shown a degree of relative resilience, bolstered by the economy's ability to withstand the fallout of the US-Iran war better than expected. This is coupled with greater clarity in monetary policy outlooks compared to other regions and limited exposure to AI-related volatility.
European equities witnessed inflows of $2.44 billion during the week ending August 12, marking the largest inflows since the week ending February 25—shortly before the outbreak of the US-Iran war—according to LSEG Lipper data.
Eurozone government bond yields edged slightly lower, following a week dominated by pressures in global bond markets that intervention by the US Treasury seemingly failed to fully contain.
Investors kept a close watch on the US Treasury market after US Treasury Secretary Scott Bessent stated that the government might increase its Treasury buyback operations, hinting at potential measures to achieve greater fiscal discipline.
Separately, Bessent drew attention after broadening US President Donald Trump's pledge to wage an economic war on Iran, stating that America would impose the "toughest sanctions in history" on Tehran.
Oil Nears a Monthly Peak
These threats dampened optimism regarding an agreement to fully reopen the Strait of Hormuz, pushing Brent crude to a one-month high of $94.71 per barrel before pulling back on profit-taking.
Daniela Hathorn, senior market analyst at Capital.com, noted: "Right now, you are seeing some of this uncertainty reflected in oil prices and market sentiment, but it hasn't yet dominated the scene because markets don't fully believe that the US will ultimately follow through with these sanctions."
Stock Movements
NIBE Industrier: Topped the STOXX 600 gainers, surging 8.4% after the Swedish heat pump manufacturer reported its second-quarter results.
Banca Generali: Shares fell 1.8% after Monte dei Paschi di Siena (MPS) launched simultaneous share-swap takeover bids totaling nearly 34 billion euros ($39.76 billion) for its rival Banco BPM and the wealth manager, escalating a battle that is reshaping the Italian banking sector.
CTS Eventim: Dropped 2.4% after the German ticketing company posted second-quarter results that traders described as "mixed," citing strong sales against "rather sluggish" profit growth.