Europe open: Stoxx breaks through 540 level; Smiths soars on breakup plan

(Sharecast News) - European markets on Friday strode into record territory as investors welcomed the latest rate cut from the European Central Bank and dovish comments from bank president Christine Lagarde. The pan-regional Stoxx 600 index breached 540 for the first time and was looking at the 541 mark at 0841 GMT. Britain's FTSE, Germany's DAX and Spain's IBEX also hit fresh intra-day highs.

Investors welcomed the ECB's expected quarter-point interest rate cut on Thursday, but it was Lagarde's comments on weakness in the eurozone economy that raised bets the bank would impose three more cuts to 2% by the end of the year.

Eyes will also be on Germany for the latest inflation data.

The gold price recorded an all-time high on Thursday, hitting $2,820 an ounce as investors fretted over the potential re-emergence of inflation with US President Donald Trump threatening tariffs that would likely push up prices for US consumers.

"Trump wants to see US producers benefit instead or at least foreign manufacturers in countries without big goods trade surplus with America. But this is wishful thinking, especially in the short term, as such trade changes can take years, if they are possible," said Hargreaves Lansdown analyst Susannah Streeter.

"Instead, it's likely that US importers will simply put the burden of extra costs onto their customers in the form of higher prices. This risks pushing up inflation again, an eventuality the Federal Reserve is well aware of, hence its more cautious stance this week when it comes to interest rate cuts."

In equity news, UK engineering business Smiths Group surged after announcing plans for a breakup through the sale of electronic connectors unit and a demerger or disposal of its detection operation as part of a strategic review that includes extending its share buyback to £500m.

Novartis rose after the drugmaker's quarterly adjusted net income easily beat estimates.

Reporting by Frank Prenesti for Sharecast.com