European stocks experienced a solid upswing on Friday, buoyed by the potential for the US and China to ease their trade tensions during discussions this weekend, prompting a boost in risk-on assets. The STOXX 50 index climbed 0.4% to reach 5,310, while the broader pan-European STOXX 600 index similarly rose 0.4%, settling at 548.
In terms of policy, European Central Bank official Olli Rehn indicated that the central bank should contemplate reducing interest rates in their upcoming meeting, should forthcoming forecasts continue to show a trend of disinflation and weakening growth momentum.
The day's gains were led by consumer discretionary firms and utility suppliers, which had previously underperformed. Notable performers included LVMH, BMW, L'Oreal, and Enel, each advancing by more than 2%. Banks also saw gains as investors speculated on the possible emergence of a third major Italian lending institution. Shares of Mediobanca surged following stronger-than-expected Q1 results and reaffirmation of its pursuit of acquiring Banca Generali. Concurrently, Banca MPS saw gains following robust earnings reports and its expressed interest in acquiring Mediobanca.
