Europe open: Stocks push higher as Yellen signals rate hike this year; automakers rally

LONDON (ShareCast) - (ShareCast News) - European stocks rose in early trade, bouncing back from losses in the previous session as investors digested the latest comments from US Federal Reserve chairwoman Janet Yellen. At 0855 BST, the benchmark Stoxx Europe 600 index was up 2.5%, Germany's DAX was 2.4% firmer and France's CAC was up 2.6%.

"Investors are chirpier this morning on the back of Janet Yellen's comments confirming the US economy is in rude health," said Mike McCudden, head of derivatives at Interactive Investor.

"The Fed has been rolling out different members to speak publicly all week in an attempt to reassure markets, but it took Yellen before the market listened. While many agree that now is the time to start monetary tightening in the US, the global repercussions are more difficult to assess and uncertainty breeds volatility.

"As China and the Eurozone continue to stumble, equity markets may be stuck in the mire for some time to come. Shares (Berlin: DI6.BE - news) may have got off to a flyer this morning but we can expect to see risk appetite starting to wane as we head towards close of play and the weekend break." On Thursday, Yellen suggested the Fed is still planning to raise rates by the end of the year as long as inflation is stable and the economy is strong enough to support employment.

"It (Other OTC: ITGL - news) will likely be appropriate to raise the target range of the federal-funds rate sometime later this year and to continue boosting short-term rates at a gradual pace thereafter as the labour market improves further and inflation moves back to our 2% objective," she said in a speech at the University of Massachusetts.

On the corporate front, Volkswagen (Other OTC: VLKAF - news) rallied. The company's board meets on Friday and is due to announce a replacement for chief executive Martin Winterkorn, amid reports that Porsche's CEO Matthias Mueller is the front-runner.

Meanwhile, BMW (Swiss: BMW.SW - news) was also on the front foot following sharp losses in the previous session, as German car magazine Auto Bild clarified a report it put out on Thursday, saying it had no evidence of data manipulation at the car maker.

Pharmaceutical company Sanofi (NasdaqGM: GCVRZ - news) rose sharply following report it's considering selling its bio-surgery and renal units.

In London, Synergy Health (Other OTC: SYHEF - news) rocketed after it announced that a federal court in Ohio has ruled against the Federal Trade Commission's request for a preliminary injunction to block Steris (NYSE: STE - news) ' $1.9bn acquisition of the group.

Still to come on the economic calendar, Eurozone money supply is at 0900 BST, while the third release of second-quarter US GDP is at 1330 BST and University of Michigan consumer confidence is at 1500 BST.