European stocks extend rally as investors await Bank of England rate decision

European stocks advanced on Thursday, November 5, extending the previous session's gains as investors welcomed the strong performance of Wall Street following the US congressional elections and assessed fresh corporate earnings.

Banking and consumer stocks helped support the broader market, while lower oil prices eased concerns about inflation. Attention also turned to the Bank of England's interest rate decision later in the day.

Price overview

As of 09:10 GMT, Germany's DAX climbed 1.77% to 26,358.11 points, while France's CAC 40 advanced 2.06% to 8,185.74 points.

Britain's FTSE 100 gained 1.83% to 10,833.49 points, while the Euro Stoxx 50 rose 1.92% to 6,262.55 points.

Spain's IBEX 35 surged 3.26% to 19,419.95 points.

US election results lift sentiment

European equities benefited from Wednesday's sharp rally on Wall Street, where the Dow Jones Industrial Average gained more than 1,500 points.

Investors continued to assess the implications of Democratic control of Congress, particularly for fiscal policy, trade relations and corporate regulation.

Bank of England decision in focus

The Bank of England is widely expected to raise its benchmark interest rate by 25 basis points to 4% on Thursday, responding to persistent inflation pressures.

Investors will closely examine the accompanying policy statement for indications of further tightening.

Corporate earnings support gains

European investors also assessed company earnings and trading updates, with British retailer Next reporting stronger-than-expected international sales.

Banking shares attracted buying interest as investors weighed the prospect of interest rates remaining elevated.

Market outlook

European equities could extend their gains if corporate results remain resilient and central banks avoid unexpectedly hawkish signals.

Friday's US employment report will provide another test of investor confidence, particularly through its implications for Treasury yields and Federal Reserve policy.