Europe open: Banks start 2020 on front foot after China eases policy

Stocks on the Continent have started the New Year higher following news of central bank easing in China and that the phase-one trade deal with Beijing would be signed on 15 January.

Overnight, the People's Bank of China cut the reserve requirement ratio for the country's lenders by 50 basis points, close on the heels of US President Donald's Trump's announcement, two days before, that the phase-one trade deal with Beijing would be signed on 15 January.

Trump also said that he would travel to China to kick-off talks on a second round trade deal, leaving investors waiting on a daily press briefing by China's ministry of foreign affairs, on Thursday, for further possible news.

According to analysts at Danske Bank, with the holidays now in the rear-view mirror, investors would be better able to discern whether recent gains in the euro and pound were 'macro-driven' or just a function of weak liquidity.

Danske Bank added: "While bond yields have risen almost 50bp since August, equities have continued to rally [...] One big question is whether we will see some reallocation from equities into fixed income in the coming months on the back of the strong equity markets and cheaper bonds."

As 0f 0825 GMT, the German Dax was up 0.34% to 13,293.83, alongside a gain of 0.69% to 23,667.73 for the FTSE Mibtel, while the Cac-40 was rising 0.90% to 6,032.09 and the Spanish Ibex 35 was 0.81% stronger at 9,626.1.

Euro/dollar was drifting 0.08% lower to 1.1211 alongside.

Pacing gains on the Stoxx 600 were shares of Commerzbank, Deutsche Bank, AIB Group, Airbus and IAG.

Going the other way, Tullow Oil was at the bottom of the pile.

At the sector level, the Stoxx 600 sub-index for Financials was flat, while that for Basic Resources was running up nearly 1.0%, but it was Banks that were doing best, with the gauge that tracks that group rising 1.63%.

In economic news, the spotlight was on Madrid, following multiple reports that a minority left-wing coalition government could well be voted in on 7 February, helping to reduce uncertainty - at least in the very near-term.

At 0900 GMT, IHS Markit was due to publish a final reading for its factory sector Purchasing Managers' Index for December.

Stateside, the economic calendar for Thursday was very light, with a reading on initial weekly jobless claims due out at 1330 GMT set to be the main point of interest for investors.

Further afield, survey compiler Caixin's China manufacturing sector PMI slipped from a reading of 51.8 for November to 51.5 in December (consensus: 51.6).

Freya Beamish at Pantheon Macroeconomics said the dip in the China PMI was not really surprising coming as it did after a strong run, although a drop in a sub-index for new orders contained in the same report was 'disappointing'.

CAC 40 - Risers

Airbus SE (AIR) 134.63 +3.18%

ArcelorMittal SA (MT) 15.98 +2.14%

Peugeot (UG) 21.68 +1.80%

Valeo (FR) 31.96 +1.77%

Renault (RNO) 42.86 +1.62%

Capgemini (CAP) 110.63 +1.59%

Societe Generale S.A. (GLE) 31.42 +1.30%

Kering (KER) 592.60 +1.26%

Atos (ATO) 75.25 +1.25%

Bouygues (EN) 38.33 +1.20%

CAC 40 - Fallers

Safran (SAF) 137.42 -0.16%

L'Oreal (OR) 263.92 -0.03%