Europe open: Shares make gains on back of late Wall St rally

European stocks defied expectations and opened slightly higher on Thursday, tagging on to a late-session rally in the US boosted by the release of US Federal Reserve May meeting minutes showing unanimous support for rate hikes.

The pan-European Stoxx 600 index was up 0.28% in early deals with all major regional bourses higher. Asian shares were lower except for China.

“European markets have opened modestly higher after a mixed session in Asia as positive momentum tries to carry forward from Wall Street where the Dow is on track to snap its eight-week losing streak,” said Interactive Investor head of markets Victoria Scholar.

“The Fed’s minutes were hawkish but as expected with policymakers sounding optimistic and in control. Having hiked its benchmark federal funds rate by half a percentage point this month, it looks like two further 50 basis point hikes in quick succession are likely followed by further 25 basis point hikes in autumn.”

Scholar added that an upbeat Fed assessment on the state of the US economy as well as talk of ‘expedited’ tightening which could leave room for flexibility and even a possible pause later this year helped support risk-on sentiment in the markets.

In equity news, shares in Intermediate Capital Group rose as the asset manager reported better-than-expected results.

German telecoms group Freenet gained after a broker upgrade to ‘buy’ from Goldman Sachs.

Auto Trader shares were up as the company reported surging profits.

On the downside, shares in UK renewables technology firm Johnson Matthey slid 5% as it said current-year operating profits would be in the lower half of consensus forecasts and announced the sale of its battery business.

BT Group shares fell on news that the UK government was set to probe Altice UK’s stake in the telecoms group.