Europe open: Stocks edge higher as EU referendum looms

European equity markets edged tentatively higher in what appeared to be relatively calm trading a day ahead of Britain’s referendum on EU membership.

At 0835 BST, the benchmark Stoxx Europe 600 index was up 0.3%, Germany’s DAX was 0.6% higher and France’s CAC 40 was up 0.5%.

At the same time, oil prices advanced, with West Texas Intermediate up 0.9% at $50.32 a barrel and Brent crude 0.8% firmer at $51.00.

Rebecca O’Keeffe, head of investment at Interactive Investor, said: “Although the poll predictions are still making the EU referendum results too close to call, global equity markets have maintained their positive Remain stance over the past few days and this has continued in European trade today, with equities pushing further forward.

“With less than 24 hours before voting starts, markets are now pricing in virtually no risk of an exit vote, which begs the question as to whether the euphoria is being overdone and how much upside still exists for investors, or whether this is irrational exuberance and investors are ignoring the risks?

In corporate news, Swedish retailer Hennes & Mauritz rose despite reporting a 17% decline in second-quarter profit.

In London, FTSE 250 department store chain Debenhams was sharply lower after it said like-for-like sales fell in the third quarter and warned gross profit margins could be flatter than previously thought.

There are no Eurozone data releases of note due, but investors will turn their attention once again to Federal Reserve Chair Janet Yellen as she delivers the second part of the her two-day testimony before Congress.

“The past six months have seen investors and the market take a seemingly different view to the Federal Reserve as to the speed of any prospective US rate rises, causing significant concern that the market was being too optimistic and underestimating the risks,” said O’Keeffe.

“However, Janet Yellen trod a very dovish path yesterday, allowing equity markets to breathe a sigh of relief as the Fed appeared to come more into line with market expectations on the path of interest rates, reducing one source of market risk for investors.”