Europe close: Stocks end higher led by gains for Basic Resources

European stocks were firmly in the black at the end of the week with shares in the basic resources space racing ahead, amid talk that China fiscal stimulus was in the pipeline and a dip in the US dollar.

According to analysts at SP Angel, new stimulus was expected from Beijing around the 20th anniversary of the Chinese Communist Party's 20th national congress on 16 October.

The Stoxx 600 index was up 1.52% at 420.37 with gains in the pan-European equity benchmark led by a 4.54% jump in Basic Resource.

Germany’s DAX was 1.43% firmer, rising to 13,088.21, and France’s CAC 40 was up by 1.41% to 6,212.33.

In parallel, the US dollar spot index was down by 0.67% to 108.98 while front-dated Brent oil added 3.5% to $92.61 a barrel on the ICE.

Dutch TTF natural gas futures fell 13.54% to €207/MWh.

SP Angel analysts also cited data published earlier by China's National Bureau of Statistics, which showed that inflation in China slowed in August, as a reason for the move.

Closer to home, European Union energy ministers met in Brussels to discuss measures to tackle the energy crisis.

Industry bodies in Norway and Germany reportedly pushed back on proposals to limit the price of natural gas imports such that the European Commission was forced to return to drawing board for now.

Investors were also continuing to mull an unprecedented 75 basis points rate hike by the European Central Bank on Thursday. In a bid to tackle surging inflation, the Bank lifted the key interest rate to 1.25%, as widely expected, and the deposit rate to 0.75% from zero.

It said it now expects inflation to average 8.1% this year, 5.5% in 2023, and 2.3% in 2024. The ECB also slashed its economic growth expectations for the bloc in 2023 to 0.9% from 2.1%.