Europe open: Stocks edge higher on stimulus hopes

European stocks edged higher in early trade, underpinned by expectations of further central bank stimulus.

At 0835 BST, the benchmark Stoxx Europe 600 index was up 0.3%, Germany’s DAX was 0.5% firmer and France’s CAC 40 was up 0.4%.

In London, the FTSE 100 was 0.2% higher while the more domestically-focused FTSE 250 was 0.1% lower.

At the same time, oil prices made small gains. West Texas Intermediate was up 0.2% at $48.44 a barrel and Brent crude was 0.3% higher at $49.84.

The mood was supported by comments from Bank of England governor Mark Carney, who on Thursday hinted at the prospect of further interest rate cuts over the summer following the UK’s decision to leave the European Union.

"The Committee will make an initial assessment on 14 July, and a full assessment complete with a new forecast will follow in the August Inflation Report," Carney said.

"In August, we will also discuss further the range of instruments at our disposal."

Mike van Dulken, head of research at Accendo Markets, said: “While markets like the idea of more stimulus from any major central bank, they especially like the idea that a weak GBP sterling keeps the USD strong and thus fends off the Fed from a rate rise for a good while longer.”

Investors in Europe also digested data out of China on Friday that showed the manufacturing sector weakened in June, but the services sector improved.

The Caixin manufacturing purchasing managers' index, a private gauge of factory activity, dropped for the third month in a row to 48.6 in June from 49.2 in May, missing expectations for it to remain unchanged. A reading below 50 indicates contraction.

China’s official manufacturing PMI fell to 50.0 in June from 50.1 the previous month, in line with expectations.

Meanwhile, data from the National Bureau of Statistics showed China’s official non-manufacturing PMI, which covers services such as retail and real estate, improved to 53.7 from 53.1 in May.

Capital Economics said: “The manufacturing PMIs continue to disappoint. But given the recent resilience of the service sector and signs of strength in construction, we still aren’t overly concerned about the near-term outlook for China’s economy.”

In corporate news, AstraZeneca was a little lower after saying it has entered into agreements to support its strategic focus on three main therapy areas - respiratory, inflammation and autoimmunity; cardiovascular and metabolic disease; and oncology.

BHP Billiton pushed higher despite saying that its plans to settle claims over the 2015 Samarco mine disaster had suffered a major blow after a Brazilian court reinstated a AUD$8bn public civil claim.

Still to come, investors will eye eurozone manufacturing PMI at 0900 BST and the Eurozone unemployment rate at 1000 BST.