European shares open higher

On Friday European equities were higher as investors counted on Chinese authorities taking steps to improve the nation’s weakening economy and the UK was expected to ease coronavirus travel restrictions.

The regional Stoxx Europe 600 index gained 0.4 per cent as shares in luxury fashion groups and airlines gained ground.

The People’s Bank of China injected an extra $14bn of shortterm funds into the country’s banking system on Friday, its most since February. Analysts regarded this as an attempt to reduce lending conditions following a debt crisis at major homebuilder Evergrande.

The Stoxx was also raised by travel shares as UK media reports proposed the government would ease restrictions and quarantine rules in time for the school half-term break. British Airways owner International Airlines Group rose 4 per cent and package holiday provider Tui gained 5 per cent.

London’s FTSE 100 index underperformed the Stoxx, however, eking out a 0.2 per cent rise as shares in large miners Anglo American and Rio Tinto fell following a drop in iron ore prices driven by Chinese curbs on steel production.

China’s central bank in April told lenders to control credit supply to prevent asset bubbles after the economy had quickly recovered from the first wave of coronavirus infections.

Beijing is now dealing with a slowing down in industrial production, retail sales and the real estate market while outbreaks of the highly infectious Delta coronavirus variant have reduced travel and pressured manufacturing.

The yield on the 10-year US Treasury note added 0.01 percentage point to 1.338 per cent ahead of the Federal Reserve’s meeting next week, where it is expected to offer signals about when it will reduce its $120bn a month of crisis-era bond purchases.

Brent crude, the oil benchmark, fell 0.5 per cent to $75.30 a barrel.