LONDON — European stock markets were higher on Monday after closing Friday at a six-week low.
The Stoxx 600 index trimmed earlier gains to trade 0.1% higher in afternoon trading, with sectors spread across positive and negative territory. Auto stocks led gains, up 1.1%, as construction stocks dipped 0.6%.
China’s central bank cut its one-year loan prime rate by less than expected Monday, and left its five-year rate unchanged.
Economists expected a 15 basis point cut to both due to default risks in the embattled property sector, and raised questions over whether China will deliver a stimulus-led economic turnaround.
Zoe Gillespie, chartered wealth manager at RBC Brewin Dolphin, said the moves showed a “lack of ambition,” but that China faced a “tough play.”
“It’s difficult for the Chinese authorities to stimulate with the high levels of debt, but it’s also difficult when you look at the currency risk as well,” she told CNBC’s “Squawk Box Europe.”
“You’ve got the U.S. raising rates, dollar strengthening… There’s a lot for central policymakers to do to their protect the currency and also stimulate the economy.”
The People’s Bank of China last week enacted surprise cuts to its short- and medium-term lending rates as data highlighted weak credit growth and deflation risks.
The Federal Reserve’s Jackson Hole symposium begins Thursday, and investors will be hunting for clues on the course of interest rates.
Asia-Pacific stock markets traded mixed Monday, while the S&P 500 edged higher as Wall Street tried to recover from another weekly decline.
— Clement Tan contributed to this report
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