The prospects of more fiscal stimulus in the United States has helped boost sentiment on markets. ©AFP/File Eva HAMBACH

London (AFP) – Europe’s major stock markets rose Thursday on growing hope of a coronavirus economic stimulus package in the United States after months of deadlock, while the British pound stumbled as Brexit concerns resurfaced.

Asia began the new trading quarter on a quiet note, with Tokyo closed by a computer glitch and several others including Hong Kong and Shanghai shut for holidays, though there were healthy gains elsewhere.

“Hopes that a US fiscal stimulus package could be just around the corner, in addition to upbeat US data, is driving demand for riskier assets,” said City Index analyst Fiona Cincotta.

Democratic House Speaker Nancy Pelosi and US Treasury Secretary Steven Mnuchin have held a series of talks this week aimed at breaking the impasse and both have said they were “hopeful”.

Reports out of Washington said the two sides were looking at an “escalator” compromise in which the new stimulus starts at $1.5 trillion — around what Republicans are open to — and rises closer to the Democrats’ $2.2 trillion plan if the pandemic persists.

Wall Street had provided a strong lead Wednesday with all three main indexes ending a torrid September with a rally, which was also helped by a forecast-beating reading on US jobs creation, which bodes well for government figures due Friday.

Early polls meanwhile showed increasing expectations Democrat Joe Biden would win November’s election against the pro-business, anti-regulation Republican Donald Trump, after Tuesday’s chaotic debate saw the two trade personal barbs and shout over each other.

– Pound dips –

The British pound was meanwhile under pressure after the European Union launched legal action over the UK government’s attempt to overturn parts of the Brexit withdrawal agreement.

“Sterling has been stopped in its tracks as negative Brexit headlines turn the tide in the market once again,” said OFX analyst Sebastien Clements.

The infringement procedure, which could come before European courts, has not yet derailed post-Brexit trade talks, but reflects the pessimistic mood in Brussels as time runs short for a deal.

On Tuesday, British lawmakers adopted a bill to regulate the UK’s internal market from January 1, when Britain will complete its post-Brexit transition period and leave the EU single market and customs union.

The proposed law, by London’s own admission, overwrites parts of the withdrawal treaty that Prime Minister Boris Johnson signed with EU leaders last year, resulting in a breach of international law.

London stocks nevertheless advanced as upbeat manufacturing survey data also eclipsed the impact of a multi-billion-pound plan by virus-hit aerospace giant Rolls-Royce to shore up its finances. The news however sent Rolls-Royce shares slumping about ten percent in value.

– Key figures around 1030 GMT –

London – FTSE 100: UP 0.9 percent at 5,917.40 points

Frankfurt – DAX 30: UP 0.1 percent at 12,770.73

Paris – CAC 40: UP 0.6 percent at 4,833.13

EURO STOXX 50: UP 0.2 percent at 3,201.30

Sydney – S&P/ASX 200: UP 1.0 percent at 5,872.90 (close)

Tokyo – Nikkei 225: Trade halted for the day

Hong Kong – Hang Seng: Closed for holiday

Shanghai – Composite: Closed for holiday

New York – Dow Jones: UP 1.2 percent at 27,781.70 (close)

Pound/dollar: DOWN at $1.2837 from $1.2920 at 2100 GMT

Euro/pound: UP at 91.37 pence from 90.72 pence

Euro/dollar: UP at $1.1731 from $1.1721

Dollar/yen: UP at 105.60 yen from 105.48 yen

West Texas Intermediate: DOWN 0.4 percent at $40.07 per barrel

Brent North Sea crude: DOWN 0.3 percent at $42.15 per barrel

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.