European Markets Jumped After Yellen's Speech Strengthens Case For Rate Hike

(RTTNews) - The European markets got off to a weak start Friday, ahead of today's highly anticipated speech by Fed Chair Janet Yellen. The markets came off their early lows after the release of some solid German and French consumer confidence data, but remained trapped in a sideways trend.

However, the markets broke out sharply higher in the afternoon, after Yellen said in her speech that the case for another interest-rate hike has strengthened.

"In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months," Yellen said in a speech prepared for delivery to the Jackson Hole summit.

The pan-European Stoxx Europe 600 index advanced 0.56 percent. The Euro Stoxx 50 index of eurozone bluechip stocks increased 0.76 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, added 0.61 percent.

The DAX of Germany climbed 0.55 percent and the CAC 40 of France rose 0.80 percent. The FTSE 100 of the U.K. gained 0.31 percent and the SMI of Switzerland finished higher by 0.33 percent.

In Frankfurt, Volkswagen climbed 3.11 percent on a Bloomberg report that the car maker will spend about $1.2 billion to compensate its 652 U.S. auto dealers for losses caused by its diesel-cheating scheme.

BMW increased 1.29 percent and Daimler rose 0.95 percent.

In Paris, Vivendi sank 1.73 percent after it logged a steeper-than-expected fall in second-quarter profits. The media company also unveiled plans to cut 300 million euros in costs from its pay-TV unit Canal Plus.

Peugeot climbed 0.94 percent and Renault added 1.07 percent. Car parts maker Valeo also gained 0.87 percent.

In London, Restaurant Group soared 3.51 percent. The struggling owner of the Frankie & Benny's and Chiquito chains announced a major overhaul of its operations after posting a pre-tax loss in the first half.

Amec Foster Wheeler surged 6.52 percent after Morgan Stanley upgraded its rating on the stock to "Overweight" from "Equalweight."

Defense, security and aerospace company BAE Systems rose 2.27 percent after Berenberg upgraded its rating on the stock to 'Buy' from 'Hold.' Digital security company Gemalto jumped 6.51 percent in Amsterdam after its first-half results beat expectations.

German consumer sentiment is set to develop positively in September as Brexit vote seems to have caused only temporary uncertainty, survey results from the market research group GfK showed Friday.

The forward-looking consumer climate index rose to 10.2 in September from 10.0 in August. The score was forecast to remain unchanged at 10.0 in September.

France's gross domestic product stagnated as estimated in the second quarter, the second estimate from the statistical office Insee showed Friday. Gross domestic product remained flat from the prior quarter, after expanding 0.7 percent in the first quarter.

France's consumer confidence improved unexpectedly in August, though marginally, figures from the statistical office INSEE showed Friday. The consumer confidence index rose to 97.0 in August from 96.0 in the previous month. Economists had expected the index to remain unchanged at 96.0.

The U.K. economy expanded at a faster pace in the second quarter as previously estimated, in run-up to the EU referendum, the second estimate from the Office for National Statistics showed Friday. Gross domestic product grew 0.6 percent sequentially after rising 0.4 percent in the first quarter. The growth figures matched preliminary estimate published on July 27.

British business investment increased in the three months to June, marking the first growth since the third quarter of last year, figures from the Office for National Statistics showed Friday. Business investment rose 0.5 percent from the first quarter, when it declined 0.6 percent. In the same period last year, business investment grew 1.6 percent.

U.S. economic activity in the second quarter grew by slightly less than initially estimated, according to a report released by the Commerce Department on Friday.

The report said gross domestic product increased by 1.1 percent in the second quarter, reflecting a downward revision compared to the originally reported 1.2 percent growth. The revision matched economist estimates.

Consumer sentiment in the U.S. unexpectedly saw a slight decline in the month of August, according to a report released by the University of Michigan on Friday. The report said the final reading on the consumer sentiment index for August came in at 89.8 compared to the initial estimate of 90.4.

The downward revision came as a surprise to economists, who had expected the index to be upwardly revised to a reading of 90.7.