By Peter Nurse
Investing.com - European stock markets posted strong gains Thursday, helped by France launching a new stimulus plan that includes a big lightening of the tax burden for its corporate sector.
At 3:35 AM ET (0735 GMT), the DAX in Germany traded 1.5% higher, the CAC 40 in France rose 1.6%, while the U.K.'s FTSE index was up 0.8%.
The French government announced Thursday it plans to inject 100 billion euro ($118.3 billion) of stimulus over two years to soften the economic impact of the coronavirus crisis.
The plan offers up in particular 35 billion euros for making the euro zone's second-biggest economy more competitive, 30 billion for more environmentally friendly energy technologies and 25 billion for supporting jobs, Reuters reported, ahead of the official presentation late on Thursday.
Investors will also be paying close attention to the release of services PMI data for Europe later Thursday to see if there has been a pickup in business activity in hard-hit sectors of the service economy.
Early news from Spain wasn’t encouraging, with the service sector there falling into contraction in August, as attempts to host the vital summer tourist season led to a surge in coronavirus cases and renewed local lockdowns. The PMI fell to 47.7, from 51.9 in July.
Earlier Thursday, China's service sector activity grew for a fourth straight month in August, with the Caixin services PMI index staying above the 50-mark even while dropping to 54.0 from 54.1 in July. Companies surveyed hired more people for the first time since January.
The news was less good in Japan, with the third-largest economy in the world reporting an August services PMI of 45, below July’s 45.4.
In corporate news, Capgemini (PA:CAPP) stock rose 2.3% after the French consulting and IT services provider said it expected double-digit revenue growth in 2020 driven by a gradual second-half recovery.
Staying in France, Iliad (PA:ILD) gained 0.6% after the telecommunications company reported rising first half net profit and revenue despite taking a hit from the coronavirus pandemic. Drinks companies Remy Cointreau (PA:RCOP) and Campari (MI:CPRI) both hit their highest level in a year.
Oil prices weakened Thursday, continuing Wednesday’s sharp losses amid concerns about the demand for fuel given a patchy U.S. economic recovery.
The Energy Information Administration recorded a drop to 8.78 million barrels per day in U.S. gasoline demand last week, from 9.16 million b/d a week earlier.
U.S. crude futures traded 0.7% lower at $41.23 a barrel, while the international benchmark Brent contract fell 1% to $43.99. Both benchmark contracts saw falls of more than 2% on Wednesday, with WTI sliding to its lowest close in nearly four weeks and Brent at its lowest since Aug. 21.
Elsewhere, gold futures fell 0.2% to $1,941.35/oz, while EUR/USD traded 0.3% lower at 1.1816.