Europe open: Stocks nudge higher but resources cap gains

European equity markets were a touch higher in early trade as a weaker euro boosted exporters, but basic resources capped gains as a stronger dollar weighed on the sector

At 0855 GMT, the benchmark Stoxx Europe 600 index and France’s CAC 40 were 0.1% higher, while Germany’s DAX was up 0.3%.

Meanwhile, oil prices retreated. West Texas Intermediate was down 1.8% to $44.61 a barrel and Brent crude was 1.4% weaker at $45.83.

On Thursday, Fed chair Janet Yellen suggested in her testimony before Congress that the central bank could move on rates “relatively soon” as the economy is strong enough to withstand this.

“At this stage, I do think that the economy is making very good progress toward our goals, and that the judgment the [Fed policy] committee reached in November still pertains,” she told the Joint Economic Committee.

Lee Wild, head of equity strategy at Interactive Investor, said: “It seems Trump has won over Wall Street, and a run of strong data this week makes it increasingly difficult for the Federal Reserve to sit on its hands for another month.

“Fed chair Janet Yellen said so herself, admitting last night that a first US rate hike in a year could happen 'relatively soon'. Four weeks perhaps? Weekly jobless claims just fell to a 43-year low and consumer inflation is now running at a six-month high. Excuses for holding back are disappearing fast.”

Yellen’s comments pushed up the dollar, while yields on the 10-year Treasury note hit a high for the year.

By early Friday, the euro was down 0.2% versus the dollar to 1.0599. This helped exporters on the European exchanges but weighed on the basic resources sector, as a stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.

The Stoxx 600 sub-index for basic resources was down 1.5%.

In corporate news, Volkswagen gained ground following a report that the German auto maker and its labour unions had agreed to 30,000 job cuts by 2021 as part of a plan to boost profit and fund a shift to electric and self-driving cars.

Engineering distribution firm Electrocomponents rallied after reporting a 44% jump in first half profits to £55.1m.

DIY company Grafton Group rose as it has agreed to by Dutch ironmonger Gunters en Meuser in order to increase its presence in Amsterdam.

On the downside, Lafargeholcim declined after cutting its mid-term profit outlook and announcing plans for a CHF1bn share buyback.

Specialty chemicals company Bodycote fell despite posting a rise in revenue in the four months to the end of October.