Europe close: Markets extend gains as energy stocks rally

European stocks rose, led higher by strength in the mining sector as investors welcomed dovish signals from the Federal Reserve.

The benchmark Stoxx Europe 600 index closed 0.33% higher, while France’s CAC 40 rose 0.54% and Germany’s DAX surged 1.04%.

The euro was on the front foot against the main currencies, surging over 1% against both the pound and the yen and gaining 0.74% against the pound.

Meanwhile, ahead of the weekend, Brent crude halted its rally on profit taking and declined 0.36% to $52.86 a barrel.

“For now the relationship between oil prices and indices is certainly a positive one given the impact it is having upon sector-specific firms,” said IG’s market analyst Joshua Mahony.

“However, higher crude prices will no doubt soon raise inflation expectations, which coupled with strong wage growth could nudge central bankers to allay fears over disinflation.”

Fed could keep rate hike on hold until 2016

Minutes released on Thursday from the latest Federal Open Market Committee meeting showed the Fed almost hiked interest rates but refrained as a result of the slowdown in China and its potential impact on the US.

According to the minutes, policymakers thought it was more prudent to wait for evidence that the economy had not deteriorated and that inflation would gradually move back toward towards the 2% annual target.

“Federal Reserve minutes that displayed caution amongst board members over raising rates has prompted one of the biggest weekly gains in European shares since January,” said CMC Markets’ analyst Jasper Lawler.

“Investors adore these Fed minutes because they signal a strong economy and low rates.”

In company news, Swiss fragrance maker Givaudan gained 4.44% after it maintained its mid-term financial targets as it posted a big jump in third-quarter underlying sales.

Steelmaker ArcelorMittal surged 5.99% after JPMorgan Cazenove raised its stance on the stock to ‘overweight’ from ‘neutral’.

On a quiet day on the economic front in the Eurozone, investors across the Atlantic had little more to focus upon in terms of data.

US total wholesale inventories beat expectations in August, as they rose 0.1% month-on-month compared with a 0.3% downwardly revised decline in July and with analysts’ expectations for a flat reading.

Meanwhile, the prices the US paid for imported goods declined more than expected in September. Excluding fuel, import prices fell 0.1% month-on-month compared with a 1.6% drop in the previous month and with analysts’ expectations for 0.5% decline.