Europe open: Stocks in the black as Brexit fears recede for now

European stocks rose in early trade, tracking gains in the US and Asia and underpinned by higher oil prices as worries about Brexit receded, at least for now.

At 0855 BST, the benchmark Stoxx Europe 600 index, Germany’s DAX and France’s CAC 40 were all up 1.4%.

At the same time, oil prices recovered. West Texas Intermediate was up 1.2% at $46.77 a barrel and Brent crude was up 1.7% to $47.98.

“A late surge in share prices yesterday continued in international markets overnight and has spilled over into a second day here,” said Lee Wild, head of equity strategy at Interactive Investor.

“The cessation of referendum hostilities following the tragic death of Yorkshire and pro-Europe MP Jo Cox may have tipped the balance back in favour of the 'Remain' campaign, but it will be hard work keeping early gains without a big swing in the opinion polls. Heading into a final weekend of campaigning, and with just days to go before the big vote, many traders could decide that squaring off positions is the best way to avoid sleepless nights.”

Morgan Stanley said in an equity strategy note that its base case was for the UK to remain in the EU, a scenario that could push the FTSE 100 up by as much as 14% from current levels.

In the event of a vote to Remain, the bank expects the FTSE to move up to a range of between 6,500 and 6,800 and the Stoxx 50 to move up to 3,150-3,300.

MS pointed out that with European indices further below their three- and six-month averages than UK indices – perhaps reflecting concerns over political contagion into Europe or an expectation that a weaker pond would limit downside for UK indices – it is possible European stocks will rally harder than UK equities in the event of a Remain vote.

If the UK votes to stay in the EU, the MSCI Europe could rally 5%-10%, although a drop of between 15% and 20% might ensure in the case of a Brexit scenario, MS said.

Greece was back in focus on Friday as Eurozone officials approved the payment of €7.5bn of aid following months of wrangling and just in time for the nation’s July loan repayments.

In corporate news, Tesco was a little higher after confirming the sale of its Dobbies Garden Centres chain.

On the downside, Ericsson AB was under pressure on news it received a request from US authorities in 2013 to answer questions relating to its operations.