European stocks rose on Friday as EU leaders were set to begin a round of delicate negotiations about the bloc’s proposed €750bn (£667bn, $828bn) coronavirus recovery plan.
Investors shrugged off fears of a second wave of coronavirus infections and instead looked to stimulus measures across the world. In the US, Democratic lawmakers unveiled a $1.5tn (£1.2tn) infrastructure bill aimed at spurring an economic recovery from coronavirus.
Stocks were also lifted by reports that China planned to comply with its phase one trade deal with the US by increasing purchases of US farm products such as soybeans, corn, and ethanol.
The pan-European STOXX 600 index (^STOXX) rose by around 0.8%. London’s FTSE 100 (^FTSE) was up by around 1.1%, even as new data showed that the UK government broke records on debt and borrowing in May.
EU leaders will on Friday hold a virtual summit to discuss the €750bn stimulus plans, which would for the first time see the bloc borrow significant sums on the bond markets as one entity.
While investors have been buoyed by the scale of the plans, the unprecedented recovery package put forward by European Commission president Ursula von der Leyen still faces considerable opposition.
The Netherlands, Sweden, Denmark and Austria — a grouping known as the “frugal four” — have vowed to oppose the efforts, citing the considerable borrowing and the fact that a big chunk of the funding will be distributed via grants, rather than loans.
“Despite starting the week on the back foot, due to concerns over a second wave of infections in China, Japan, India, as well as a number of US states, equity markets have managed to stabilise after the losses of last week,” said Michael Hewson, the chief market analyst at CMC Markets UK.
“Markets here in Europe have opened higher after China said it plans to accelerate the purchases of US farm goods as it looks to comply with the phase one of its recently completed phase one trade deal with the US,” he said.
“EU leaders are also getting together by videoconference to open negotiations over their proposed €750bn recovery plan.”
Futures were pointing to a positive open for US stocks on Friday.