Sept 16 - European stocks hit highs in a broad-based rally as news Lawerence Summers has pulled out of the race to lead the U.S. Federal Reserve bolstered expectations for easier monetary policy for longer. Ciara Sutton reports
Germany's DAX starts into the week with an alltime high, which tradesr say is influenced by outcome Fed developments and the U.S./Russia deal on Syria. Ciara Sutton reports. Summer's over but European markets have rarely been hotter. Germany's DAX kicked off the week by hitting an all time high. The rally comes after the withdrawal of Larry Summers from the race to head the US central bank. It's thought the Federal Reserve may now appoint someone who favours an easier monetary policy. Summers' departure also pushed world shares to a near five year high and prompted the U.S. dollar to slide. But CIBC's Jeremy Stretch, says it won't last. (SOUNDBITE) (English) CIBC's HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING: "We're also in a week when we are dominated or should have been dominated by the Fed but for a different reason. And of course in terms of the tapering debate and in terms of that Fed change on Wednesday. I think we've moved a considerable distance on this story, clearly it was in thinner markets. I think the juice in terms of this dollar selling trade is looking a little extreme." Traders in Frankfurt aren't celebrating either. Fidel Helmer says there are risks attached to the rally. (SOUNDBITE) (German) CAPITAL MARKET ANALYST AND TRADER WITH HAUCK&AUFHAEUSER BANK, FIDEL HELMER, SAYING: "We have a quiet market with relatively small returns, but it is constantly moving up, we have seen an all-time high today, so you have to fear a technical reaction and with a DAX high this reaction could be intense." Summers' surprise decision comes two days ahead of the Fed's announcement about when and how it will scale back its asset purchases. Investors are now betting on Bernanke's number two Janet Yellen to take over. Also pushing European shares higher is hope of a diplomatic solution to the Syrian crisis after a Russian-brokered deal averted U.S. strikes for now.