European stock prices rallied yesterday as the EU finally reached agreement on a number of key appointments, including IMF chief Christine Lagarde as the first female head of the European Central Bank.  

But investor focus was set to switch to the US later where new macro-economic data could offer an indication as to where interest rates are headed in the near future, traders said. 

Frankfurt’s blue-chip DAX 30 and the CAC 40 in Paris were both up by more than a half a percentage point in mid-afternoon trade, while in London, the FTSE made similar gains.

On the other side of the Atlantic, Wall Street also opened higher yesterday. 

“You have to look at Europe to understand today’s rally,” said Franklin Pichard, head of Kiplink Finance.

“Will Christine Lagarde, who will take the helm at the ECB in the coming months, be a fan” of accommodative monetary policy, the expert asked. For the markets, “it seems the answer will be yes”. 

Ms Lagarde, 63, is currently head of the International Monetary Fund, has been nominated to replace Mario Draghi at the ECB’s helm, a move central bank watchers believe will see a continuation of the special policy measures to stimulate economic activity in the single currency area.

“Lagarde is seen as maintaining an expansive approach to both conventional and unconventional monetary policies that will support the 19-member eurozone,” said OANDA analyst Edward Moya. 

In addition to the ECB nomination, the European Parliament elected Italian social democrat, David Sassoli, as its new president, filling the final top EU job still vacant after the bloc’s parliamentary elections in May. 

Oil prices recovered yesterday after data showed another drop in US crude stockpiles, but the rebound made only a dent in the four-percent slump Tuesday triggered by weak demand growth worries.

The commodity has endured a volatile week, having surged Monday as Russia and Saudi Arabia agreed to prolong their output caps.

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