European shares edge higher amid fears of global recession

European shares churned higher on Friday, boosted by positive investor sentiment after China hinted of plans to spur economic growth, while chipmaker stocks propped up markets, helped by solid earnings news from US counterparts.

China’s state planner said it would roll out a plan to boost disposable income this year and in 2020 to encourage consumption as the economy slowed.

The pan-European STOXX 600 index was 1.1 percent higher by 0859 GMT, with the export-reliant DAX index outperforming.

Markets were jarred earlier after London’s FTSE 100 had a delayed open due to a technical glitch. But the index climbed 0.7 percent higher, boosted by financials.

European shares staged a comeback from six-month lows hit during the previous session, after China warned of retaliation against US tariffs, heightening fears of the continued impact of their trade war on global growth.

However, the benchmark index was still on pace to log a third straight week of losses as worries of a global recession kept investors on edge, largely because of the trade drama.

“The real kind of fear that markets were feeling seems to have somewhat disappeared, but if you look at how much ground has been lost in the last couple of days, it’s very much down in the week,” CMC Markets analyst David Madden said.

Sterling steadies

Central banks from major economies around the world including Australia, New Zealand and India have cut borrowing costs to spur economic growth with market participants expecting the European Central Bank to step in line with them.

In Britain, the pound advanced broadly on Friday, notching up its biggest daily rise versus the euro in nearly six months as a combination of news and decent data provided enough ammunition to speculators to buy the struggling currency.

After being hit by growing concerns of Britain crashing out of the European Union without a deal by October 31 after arch-Brexiteer Boris Johnson became prime minister last month, the pound saw a brief reprieve this week.

But the pound advanced only to an eight-day high versus the greenback, though it jumped one percent against the euro, its biggest single-day rise since late March.

Leading the charge on the STOXX 600 was a rally in semiconductor companies, which pushed the technology sector up 1.4 percent – with AMS, Infineon Tech and STMicroelectronics making substantial gains.

Better-than-expected results from gaming chipmaker Nvidia and chip gear maker Applied Materials overnight reinforced the rally.

Italy’s blue-chip index rose 1.2 percent, catching up with its peers after a midweek holiday on Thursday.

Specialty chemicals company IMCD slumped 18 percent to the bottom of the STOXX 600, after it reported weaker-than-expected organic sales in the second quarter.