By Medha Singh
Aug 28 (Reuters) – European shares inched up on Friday, with French stocks recovering from the previous session’s selloff, as investors turned their focus to Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole.
The pan-European STOXX 600 index rose 0.5% to 655.33 points at 0708 GMT, heading for a modest weekly rise after two consecutive weekly declines.
Leading the regional bourses, France’s CAC 40 firmed about 1.1% after sliding to a one-month low in the previous session.
French lenders Societe Generale, BNP Paribas and Credit Agricole rose between 0.8% and 1.4% after slumping in the prior session on worries over the political and fiscal outlook ahead of next spring’s presidential election.
EssilorLuxottica gained 3% and topped the French blue-chip index after announcing a share buyback plan. Luxury stocks firmed 2.3%.
French GDP growth was revised down to flat in the second quarter from a preliminary 0.2% expansion, the latest data showed, signalling weaker-than-expected momentum in the euro zone’s second-largest economy.
Fitch is expected to review France’s rating later in the day, a year after it downgraded the country to a record-low A+.
The centrepiece for Friday will be Warsh’s Jackson Hole speech, with investors eager to see whether the Fed chair departs from his preference for limited policy signalling and provides fresh guidance on inflation, interest rates and recent bond market volatility.
“Several of his colleagues warned of inflationary pressures ahead of the event, and ECB speakers have started to lean into a September hike as well – although most are still non-committal about any moves beyond that horizon,” said Bas van Geffen, senior macro strategist at Rabobank.
European Central Bank board member Isabel Schnabel will also join a panel at the same event.
Traders have increased their bets on ECB rate hikes in recent weeks as the U.S.-Iran conflict has again pushed up energy prices, weighing on the STOXX 600.
A Reuters report on Wednesday said European Central Bank policymakers are ready to raise rates at their next meeting in September but they have little appetite to signal further tightening after that.
Berenberg said it now expects a 25-basis-point ECB rate increase next month, joining market consensus despite concerns the central bank may be overreacting to supply-driven inflation.
Most European sub-sectors were higher with energy stocks, this week’s top laggard, firming 0.5%.
Among other moves, Strabag jumped 11.2%, on track for its best day since January, after the Austrian construction group lifted its annual outlook.
Belgium’s Ackermans & Van Haaren gained 8.3% after reporting first-half results and upgrading its net profit growth outlook.
(Reporting by Medha Singh in Bengaluru; Editing by Devika Syamnath)
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