European markets at their third straight weekly gain

Heavyweight mining shares gained ground, with Xstrata up, rising along with metal prices.  Societe Generale strategists see the expected rate hike as supportive for European equities, as it should boost the euro currency and tame inflation fears.

Despite the brisk three-week rally, European stock valuation levels remain comparatively low.  Investors seeking protection for their equity portfolios should start buying volatility derivatives again as the main volatility indexes fall back toward their long-term averages following a recent spike triggered by violence in Libya and Japan's nuclear crisis, said Frederic Cezard, executive director at Nomura in Paris.  Asian equities and U.S. index futures advanced.

On Tuesday most European stocks dropped before a report on U.S. service industries and the publication of the minutes of the latest meeting of the Federal Open Market Committee. Asian shares and U.S. index futures declined. Fed Chairman Ben Bernanke said that U.S. inflation was driven primarily by rising commodity prices and was unlikely to persist while other Fed officials have expressed a range of sentiments in recent weeks for and against keeping the central bank's $600 billion bond-buying program going in light of a modest recovery in the economy.

On Wednesday European stocks advanced, rebounding from earlier losses, after a report showing higher-than-forecast German factory orders offset concern that increased interest rates will dent profits. Asian shares were little changed and U.S. index futures gained.

On Thursday European stocks fell for the first time in five days after a 7.1-magnitude earthquake struck off the coast of Japan and as the European Central Bank raised interest rates for the first time in almost three years.  U.S. stocks fell, dragging the Dow Jones Industrial Average down from an almost three-year high.

On Friday European stocks rose, extending the Stoxx Europe 600 Index’s third straight week of gains, as Thursday’s aftershock in Japan caused limited damage. Asian shares and U.S. index futures increased.

This article was compiled by Valletta Fund Management Limited, a member of the BOV Group. Valletta Fund Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000.. Freephone: 80072344. E-mail: [email protected]. Website: www.vfm.com.mt.Valletta Fund Management Limited is licensed by the MFSA.