European shares rise as French stocks rebound; markets digest Warsh speech

Published Sat, Aug 29, 2026 · 07:48 AM

EUROPEAN shares rose on Friday (Aug 28), as French stocks rebounded from the previous session’s selloff, while investors assessed Federal Reserve Chair Kevin Warsh’s speech at Jackson Hole.

The pan-European Stoxx 600 index closed 0.5 per cent higher at 655.16 points, posting a modest weekly gain after two consecutive weekly declines.

France’s CAC 40 firmed about 1 per cent after sliding to a one-month low in the previous session, when worries over the government’s ability to rein in public finances ahead of next year’s elections rattled investors.

French lenders Societe Generale, BNP Paribas and Credit Agricole rose between 1 per cent and 1.9 per cent, after slumping in the prior session.

EssilorLuxottica gained 2.4 per cent after announcing a share buyback plan. Luxury stocks firmed 2.3 per cent, recording their best day in more than a month.

Still, fresh data underscored the challenges facing France’s economy. Second-quarter GDP growth was revised down to flat from a preliminary 0.2 per cent expansion, signalling weaker-than-expected momentum in the euro zone’s second-largest economy.

“These figures suggest that the economy came very close to a technical recession in the first half of the year,” said Charlotte de Montpellier, senior economist at ING. De Montpellier said that additional fiscal consolidation measures will be needed in 2026 to keep the public deficit below 5 per cent. “Without further measures, and with growth remaining so weak, the deficit could end up even higher than last year.”

Fitch is expected to review France’s rating later in the day, a year after it downgraded the country to a record-low A+.

Markets also assessed Warsh’s Jackson Hole speech, with the Fed chair reiterating his focus on bringing inflation back to the central bank’s 2 per cent target, while offering little guidance on future policy moves.

“We are entering a new era of monetary policy, one defined by less signalling, greater emphasis on real-time data, and a willingness to rethink economic first principles as AI reshapes the economy’s productive capacity,” said Jeffrey Roach, chief economist, LPL Financial.

Traders have increased their bets on ECB rate hikes in recent weeks as the US-Israeli war with Iran has again pushed up energy prices, weighing on the Stoxx 600.

Most European sub-sectors were higher, with energy stocks, this week’s top laggard, firming 0.3 per cent.

Automakers advanced 2.5 per cent, their biggest gain in more than two months, led by Germany’s BMW, which added 4.5 per cent.

Among other movers, Strabag jumped 15.8 per cent, hitting a record high, after the Austrian construction group lifted its annual outlook. Belgium’s Ackermans & Van Haaren gained 8.2 per cent after reporting first-half results and upgrading its net profit growth outlook. REUTERS