Bank recovery lifts European stocks higher

Bank recovery lifts European stocks higher

A rally in bank stocks for the first time in four sessions lifted European shares on Thursday after the U.S. Federal Reserve cut interest rates but set a higher bar for further reductions.

European banks rose the highest among major sectors, which benefitted from investors rotating into underperforming stocks. Banks are the only major sector in the red so far this year.

Central banks around the world have been loosening monetary policy to stem a slowdown in economic growth. Last week, the European Central Bank cut interest rates deeper into negative territory and asked governments to do more to prop up the euro zone economy.

However, upbeat economic data last week has resulted in central banks taking a more guarded approach to rate cuts. Following mixed signals from Federal Reserve Chairman Jerome Powell, all eyes were on the Bank of England’s policy move, due at 1100 GMT, where it is expected to stand pat on rates.