European markets close higher; Deutsche Bank and Commerzbank shares rise amid merger talks

Big 5

European markets closed slightly higher on Monday, amid mounting speculation the U.S. Federal Reserve could sound decidedly dovish at its policy meeting later this week.

The pan-European Stoxx 600 ended provisionally up 0.22 percent during deals, with most sectors and major bourses in positive territory.

Alongside Europe’s banking index, basic resources stocks were among the top performers on Monday morning, up more than 1.6 percent. Shares of Rio Tinto, Anglo American and ArcelorMittal were all firmly higher.

Looking at individual stocks, Deutsche Bank and Commerzbank surged to the top of the European benchmark. It comes after Germany’s largest lenders confirmed they were in merger talks over the weekend. Shares of both banks jumped 4.6 percent and 6.8 percent respectively.

Meanwhile, France’s EDF slumped towards the bottom of the index after HSBC cut its rating on the stock to “hold” from “buy.” Shares of the Paris-listed firm dipped over 1 percent.

The European Union’s trade surplus with the U.S. and its deficit with China increased in January, official data showed Monday. The figures serve as potential fuel for trade conflicts between the world’s two largest economies amid an ongoing trade war.

The EU surplus in goods trade with the U.S. expanded to 11.5 billion euros ($13.0 billion) in January, from 10.1 billion euros for the same period a year earlier. With China, the EU deficit increased to 21.4 billion euros, up from 20.8 billion euros in January 2018.

Market focus is largely attuned to the latest Brexit developments.

British Prime Minister Theresa May is scrambling to secure support for her Brexit deal once again, with only three days left to win approval from U.K. lawmakers ahead of a summit of the bloc’s leaders on Thursday.

The U.S. central bank will begin its meeting on interest rates on Tuesday, which ends with a news conference on Wednesday. The Federal Reserve is expected to lower their interest rate forecasts — or “dot plots” — to show little or no further tightening in 2019.

In Asia, MSCI’s broadest index of Asia-Pacific shares, excluding Japan, rose around 0.6 percent.

Source: CNBC