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European stocks edged higher on Friday, buoyed by auto and travel stocks, although they remained on course for a weekly decline after China moved to weaken its currency.
After devaluing the yuan early in the week, China’s central bank had said on Thursday that the country’s strong economy meant there was no reason for the currency to fall further, helping to calm jittery global markets.
Those reassurances helped the pan-European FTSEurofirst 300 close 0.9 per cent higher on Thursday. However, it remains down 2.5 per cent for the week, its biggest weekly decline in nearly a month, after China’s devaluation hit mining, auto and luxury stocks.
The pan-European FTSEurofirst 300 was up 0.3 per cent at 1535.18 points by 0747 GMT, with carmakers continuing to rebound, up 1 per cent. But traders said they would monitor the yuan in the coming days before making bigger bets.
“It was quite a shock what the Chinese did, there was no pre-warning. As the dust is still settling, the market is pausing here,’’ Markus Huber, senior sales trader at Peregrine & Black, said.
“If the yuan (stays) halfway stable over the next few days, then confidence is going to come back.’’
Carmakers were also boosted by a 2.4 per cent rise in Porsche after prosecutors dropped a market manipulation investigation into a member of its board.
Travel and leisure shares also rose. A 3 per cent gain by TUI led the FTSEurofirst 300.
TUI’s advance began on Thursday, after it said core earnings would come in at the top end of its forecasts this year. That brought on a spate of broker upgrades and positive comments from banks.
“We think TUI’s Q3 results and new guidance should reassure the market,’’ analysts at Barclays said in a note, reiterating an “overweight’’ rating on the stock. “It serves to reinforce our positive stance that TUI’s scale and diversification is under-appreciated.’’
Aegon fell 1.8 per cent, hit by a cut in target price from ING after it released disappointing results on Thursday.
Among top sectoral fallers on Friday, oil and gas firms dropped 0.4 per cent after US crude oil fell below $42 a barrel to prices not seen since March 2009.
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