Europe Markets: European stocks enjoy new year rally on trade deal optimism and Chinese stimulus

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European stocks started the new year with a rally on Thursday as trade optimism continued and China’s central bank gave markets a boost.

The Stoxx 600 SXXP, +0.86%   jumped 1%, along with the FTSE 100 UKX, +0.82%   , while the French CAC PX1, +1.02%   climbed 1.4% in early trading. The German DAX DAX, +0.70%   gained 0.9% and Italy’s FTSE MIB I945, +1.21%   rose 1.4% on the first morning’s trading of 2020.

What’s moving the markets?

After a strong end to 2019 followed by the New Year’s holiday, renewed optimism over a U.S.-China trade deal helped propel European stocks higher on the first day of 2020 trading. President Trump also plans to visit Beijing to begin talks on a ‘phase 2’ deal, while ‘phase 1’ will be signed in a White House ceremony on Jan.15.

China’s central bank added to the feel-good factor, announcing on Wednesday it would cut the amount of money banks will be required to have on hand from Monday – in a bid to boost the slowing economy. The reserve requirement ratio will be cut by 50 basis points, which is expected to release about 800 billion yuan ($114.6 billion) into the economy.

Which stocks are active?

Tullow Oil TLW, -6.59%   fell 3.5% after the company said it found four metres of net oil pay at its offshore Guyana well, which was less than expected. The oil and gas company said the Carapa-1 exploration well, drilled to a depth of 3,290 metres in 68 metres of water, would now be plugged and abandoned.

Airbus AIR, +2.76%   shares rose 3.1% after reports the European plane maker beat its own delivery forecast for 2019 to topple U.S. rival Boeing BA, -0.20%   as the world’s largest plane maker. Airbus delivered 863 jets last year, Reuters reported, 3 higher than its guidance.

Mining stocks enjoyed solid gains following China’s RRR cut announcement. The policy news from the world’s largest metals consumer, sent Glencore GLEN, +3.19%   shares up 3.3% and Antofagasta ANTO, +2.53%   3.2% higher.

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