London: Europe’s main stock markets rebounded strongly yesterday as traders welcomed some clarity from Federal Reserve chief Janet Yellen on the outlook for US interest rates analysts said.

However a rally by Volkswagen shares on expectations the company would imminently name a new chief executive to steer it out of the wreckage of a pollution test rigging scandal ran out of fuel as the company’s problems mounted.

London’s benchmark FTSE 100 index closed 2.47 percent higher at 6109.01 points. In the eurozone Frankfurt’s DAX 30 ended the day 2.77 percent ahead at 9688.53 points and Paris’s CAC 40 jumped 3.07 percent to 4480.66 points compared to Thursday’s close.

Milan advanced 3.68 percent and Madrid 2.45 percent. The euro dropped to $1.1193 from $1.1230 late on Thursday in New York with the US currency winning strong support from the prospect of a Fed rate rise before the end of the year.

European stock markets had closed lower on Thursday following another volatile day of trading as a spreading Volkswagen scandal offset positive German data. But equities fought back yesterday mirroring strong gains in Tokyo after US Federal Reserve chief Janet Yellen hinted at a US rate hike by the end of 2015.

Wall Street stocks climbed mostly higher on Yellen’s comments and the Commerce Department’s report that the US economy grew at a peppy 3.9 percent rate in the second quarter up from the 3.7 percent previously estimated. The Dow Jones Industrial Average rose 1.16 percent to 16390.03 points in mid-day trading. The tech-rich Nasdaq Composite Index gained 0.41 percent to 4753.62 points though the broad-based S&P 500 slipped 0.34 percent to 1932.24 after an initial rise.

“An improvement on an already strong second quarter GDP figure with the final number creeping up to 3.9% from the 3.7% initial reading appeared to take the edge off the Dow Jones at the open... European indices by and large underwent the same motions as the Dow did this afternoon” said Spreadex analyst Connor Campbell.

On Thursday Yellen said that she still expects to increase interest rates in 2015 and that concerns about weaker global growth were unlikely to affect the plan. Her remarks came a week after the US central bank opted at a widely anticipated meeting against enacting the first rate hike in nearly 10 years.

In Thursday’s speech Yellen said policymakers were still “monitoring developments abroad” but did not think they would derail the US economy.

Volkswagen shares continued to see-saw jumping more than four percent at the opening of trading. But the company’s shares slumped by more four percent. At the close of trade VW stocks were 4.32 percent down on the day at ¤107.30 off from the intraday high of ¤117 in the first few minutes after the market opened.

Asian shares ended mixed with Tokyo gaining 1.76 percent while Shanghai shed 1.60 percent. In other markets Hong Kong closed 0.43 percent higher after a two-day losing run but Sydney fell 1.60 percent and Seoul lost 0.22 percent.

AFP