By Geoffrey Smith
Investing.com -- European stock markets have started the week brightly, taking their lead from a surprisingly strong Asian market performance and an interview at the weekend with U.S. Federal Reserve Chairman Jerome Powell that underlined the central bank’s reluctance to tighten monetary policy in the near term.
At 04:00 AM ET (0900 GMT), the benchmark Euro Stoxx 600 was up 0.6 points, or 0.2% at 371.18. The U.K.'s FTSE 100 was up 0.6% while Germany's Dax was up 0.2%.
With no one story dominating the news, banks are leading the way higher after a torrid last week. Deutsche Bank (DE:DBKGn) was up 2.8% and Commerzbank (DE:CBKG) up 4.8% after reports at the weekend said Deutsche’s executive board has given CEO Christian Sewing a mandate to pursue a merger with its smaller rival. To make the math work, Sewing is insisting on much sharper cost cuts than current agreements with the two banks’ labor unions would permit, according to German newspaper Handelsblatt.
Analysts are still skeptical that the combination of two banks with chronically low profits will actually make a stronger one.
“Is this the type of stuff that people in 15 years’ time will say ‘it sounded good at the time’?” Stefan Gerlach, chief economist with EFG Bank in Zurich, said via Twitter.
The market earlier shrugged off a surprise drop in German industrial production in January, which were offset by more upbeat trade data – a rare instance of German ‘hard’ data beating expectations in recent weeks.
Elsewhere, Boeing (DE:BA) depositary receipts in Frankfurt fell over 7% on the news that China had grounded its 737 MAX airliners after a second fatal crash involving the 737 MAX at the weekend. France’s Safran (PA:SAF), which supplies engines for the airliner, fell 1.6%.
Meanwhile, oil and gas stocks were broadly higher after reports saying Saudi Arabia would continue through April to pump less oil than it is allowed to under an OPEC-led supply restraint deal. The reports suggest the kingdom is stepping up its efforts to support prices which remain under pressure as U.S. supply continues to grow faster than global demand. Royal Dutch Shell (LON:RDSa) is 0.7%, while BP (LON:BP) is up 0.5% and France’s Total up 0.6%. Europe’s majors are also benefiting from the fact that Norway’s government recommended on Friday to leave them off a list of stocks that its sovereign wealth fund should divest from.