European shares advanced on Tuesday after Federal Reserve Chair Janet Yellen made no clear reference to the timing of any increase in US interest rates.
Yellen’s remarks on Monday followed Friday’s dismal monthly jobs report, which raised concerns over the ability of the economy to absorb a rate hike as early as June.
She called the jobs report “disappointing’’, but said “one should not attach too much significance to a single report’’.
“Yellen noted several positive developments, but also pointed out some negative ones. The end result was a decline in summer tightening expectations,” said Koen De Leus, senior economist at KBC, in Brussels.
“A June rate hike is more or less out of play now, and even for a July hike, we’ll have to see a battery of hugely positive data. In the near term, all eyes will be on the Brexit story and volatility will rise as we get closer to the referendum day.”
Brexit referendum
According to two polls published in Tuesday's newspapers, Britons narrowly favour remaining in the European Union in contrast to surveys released on Monday that showed the campaign for Brexit ahead.
Britons will vote on June 23 on whether to remain part of the EU, a choice with far-reaching consequences for politics, the economy, defence and diplomacy. Divergent polls have made it difficult to predict the outcome.
The pan-European STOXX Europe 600 and the FTSEurofirst 300 equity indexes were both up 1 per cent by 0736 GMT, extending the previous session’s gains of about 0.3 per cent.
Germany’s industrial output
Germany’s DAX outperformed the broader market, with the share index rising 1.3 per cent after data showed that Germany’s industrial output rose more than expected in April, suggesting that the motor of Europe’s largest economy was humming along at the start of the second quarter.
Among sectoral gainers, commodities-related stocks were in demand. The European Basic Resources index rose 2 per cent as copper prices held near four-week, while the energy index advanced 1.6 per cent as oil prices edged higher.
BHP Billiton, Rio Tinto and Glencore rose 2.1 to 2.7 per cent. Royal Dutch Shell was up 2.5 per cent, also helped by a company announcement saying that it would sell up to 10 per cent of its oil and gas production, leaving up to 10 countries to cut costs following its $54 billion acquisition of BG Group.
Shares in Natixis rose 3.5 per cent, the top gainer in the FTSEurofirst 300 index, after Jefferies started the coverage of the company with a “buy” rating.