European stocks extended their gains for a third consecutive session on Friday, driven by investor reactions to Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium. Powell's speech appeared to solidify expectations that the central bank is poised to commence lowering interest rates.
"The time has come for policy to adjust," Powell stated, while emphasizing that "the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks."
Powell's assertion that it is time for the Federal Reserve to begin reducing rates is underpinned by his "growing confidence that inflation is on a sustainable path back to 2 percent."
Federal Reserve officials have consistently indicated the need for "greater confidence" that inflation is sustainably returning to the central bank's 2 percent target before considering rate cuts.
Powell's comments align with recent inflation data, bolstering expectations that the Federal Reserve will cut interest rates at its next monetary policy meeting in September.
In Europe, economic calendar activity was light. Data from the French statistical office INSEE showed that confidence among French manufacturers exceeded expectations in August. The manufacturing sentiment index rose to 99 in August, up from June's 43-month low of 95.
The pan-European STOXX 600 Index increased by 0.5 percent, achieving its highest closing level in nearly a month.
The U.K.’s FTSE 100 Index also gained 0.5 percent, while France’s CAC 40 Index and Germany’s DAX Index advanced by 0.7 percent and 0.8 percent, respectively.
In corporate developments, Nestlé bounced back from early losses to close slightly higher following the announcement that chief executive Mark Schneider will be succeeded by veteran executive Laurent Freixe.
Unilever saw a modest rise after recalling 137,000 cases of its single-serve Popsicle Jolly Rancher Frozen Confection Pops due to concerns they may contain milk.
Energy heavyweights BP Plc and Shell also moved upwards as crude oil prices surged, continuing their recovery from a recent downturn.
