European shares rise in cautious trading, set for worst week in 2 months

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By Sruthi Shankar and Piotr Lipinski

(Reuters) – European shares edged higher on Friday as comments from U.S. President Donald Trump that trade talks with China were “moving right along” injected some calm after a tumultuous week.

The pan-European STOXX 600 index () rose 0.4% more than an hour into trading, with banks, technology firms and retail companies leading the gains.

M&A activity boosted insurers () after Phoenix Group Holdings Plc (L:) said it would buy the British insurance unit of Swiss Re (S:) in a cash-and-shares deal worth 3.2 billion pounds ($4.1 billion). Swiss Re AG shares rose about 3%, while Phoenix Group was up 1%.

The STOXX 600 is still on track to post its biggest weekly decline in two months following conflicting headlines on trade and weak euro zone economic indicators.

Frankfurt-listed shares () rose only 0.3% as latest data showed Germany’s industrial output unexpectedly dropped in October, reviving worries over growth outlook for Europe’s economic powerhouse.

Investors, however, took the data in stride after Trump struck an upbeat tone on U.S.-China trade talks even as general uncertainty about the outcome prevailed following his comments earlier this week that a deal might have to wait until after the 2020 election.

“There’s a cautious optimism,” said David Madden at CMC Markets in London. “Stocks are a bit higher, but no one is really taking a very aggressive line because it’s still not a done deal.”

London’s FTSE 100 () took a breather with a 0.8% gain, but was also on course to record its sharpest weekly decline since early October, as a strong pound hammered exporters on the index. [GBP/]

Investors are bracing for an action-packed week as Britons go to vote on Dec. 12, with recent opinion polls suggesting the ruling Conservatives will win an outright majority needed for Britain’s smooth exit from the European Union.

All eyes will turn to the U.S. non-farm payrolls report, due at 1:30 pm GMT. The numbers are expected to show an acceleration in November job growth as former striking workers returned to General Motors’ (N:) payrolls.

Luxury stocks added to Thursday’s rally despite chief executive of puffer jacket maker Moncler (MI:) playing down speculation around a takeover by Gucci-owner Kering (PA:).

Moncler gained 1.4%, while Kering was up 0.7%.

Shares in Marks & Spencer (L:) rose 3.5% after J.P.Morgan upgraded the stock to “neutral” from “underweight”.

Shares in Ipsen (PA:) slid 20.7% after the French pharmaceutical company put on hold clinical studies of palovarotene, which treats bone disorders.

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