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The path of least resistance was higher as European stocks on Friday advanced for the sixth time in eight tries on hopes for both monetary policy and fiscal stimulus.
The Stoxx Europe 600 SXXP, +0.51% increased 0.27% to 391.02, with steelmakers including Thyssenkrupp TKA, +2.74%, Voestalpine VOE, +2.59% and ArcelorMittal MT, +2.24% gaining ground.
The German DAX DAX, +0.72% added 0.37% to 12333.94, the French CAC 40 PX1, +0.34% added 0.17% to 5630.33 and the U.K. FTSE 100 UKX, +1.14% rose 0.79% to 7409.24.
The gains in the U.K. were particularly strong as the Bank of England’s Michael Saunders — who in 2017 voted for rate hikes — said the central bank might want to consider reducing interest rates even if the U.K. government reaches an agreement with the European Union over departing.
“In such a scenario – not a no-deal Brexit, but persistently high uncertainty – it probably will be appropriate to maintain an expansionary monetary policy stance and perhaps to loosen further,” he said in remarks that pressured the British pound GBPUSD, -0.2516% .
Strategists at RBC Capital Markets say governments may take the mantle from central banks in attempting to spur growth.
“The spreading economic downturn and the lack of room for monetary policy have increased calls for fiscal policy to step up. We firmly believe that this will be a growing theme over the coming months and quarters and will eventually have a significant impact on markets,” the strategists told clients.
Former German finance minister Wolfgang Schauble, known for being reluctant to spend and now president of the German parliament, this week called for a review of fiscal policy.
Imperial Brands IMB, -2.04% continued to lose ground after Thursday’s profit warning, falling 2.7% to 1750 pence. “Imperial’s disappointing performance on its vaping portfolio raises questions if brand proposition and level of investments are adequate to successfully compete in the new world of Tobacco in our opinion,” said Bank of America Merrill Lynch analysts who reiterated an underperform and lowered its price target to 1650 pence from 1850 pence.