European record stock rally has further room to run

European stocks have another 6 per cent to climb this year from current record-high levels, according to strategists at Citigroup.

The team led by Beata Manthey lifted their year-end Stoxx 600 Index target to 540 points from 510 previously, the highest among strategists tracked by Bloomberg. They cited growing certainty on interest rate cuts, improving views on global growth and a weaker US dollar as beneficial for equities.

European stocks are poised for a ninth straight week of gains, the best run since 2012, in a rally driven by investor hopes that central banks will soon start reducing interest rates. Expectations were boosted this week by the Bank of England signalling rate cuts were “in play” and an unexpected rate reduction by the Swiss National Bank.