Italian stocks jump on reassuring euro remarks, leading European markets higher

European stocks bounced up Monday, as Italian stocks charged up and as investors set aside this weekend’s acrimonious Group of Seven meeting in Canada.

Italy’s benchmark rose after the country’s new finance minister offered reassuring comments about the eurozone.

Investors are watching for news from Singapore, where U.S. President Trump is scheduled to meet North Korean leader Kim Jong Un in an unprecedented summit.

How markets are performing

Italy’s FTSE MIB index surged 2.1% to 21,792.58, with that early move wiping out Friday’s slide of 1.9%.

Investors also snapped up Italian debt, driving down the yield on Italy’s 2-year bond   by 49 basis points to 1.1%, according to Tradeweb. Yields fall when bond prices rise. The yield on 10-year bond  fell 26 basis points to 2.8%.

The pan-European Stoxx Europe 600 Index climbed 0.5% to 387.12. All sectors rose, led by the financial and telecom groups. On Friday, the index fell 0.2% and ended last week lower by 0.5%.

Germany’s DAX 30 index  rose 0.6% to 12,839.58, and France’s CAC 40 index gained 0.3% to 5,466.35.

In London, the FTSE 100  added 0.4% to 7,713.79.

The euro moved up to $1.1818 from $1.1771 late Friday in New York.

What’s driving markets

Italian stocks and bond prices leapt as Italian Economy Minister Giovanni Tria said the country’s new government is committed to the euro, according to an interview with Italian newspaper Corriere Della Serra published Sunday. That appeared to allay fears that Italy’s new antiestablishment coalition government — led by the 5 Star and the League parties — would ditch the shared currency.

“The position of the government is clear and unanimous. There is no discussion about leaving the euro. The government is determined to prevent any emergence of market conditions that would lead to leaving the euro,” Tria said, according to a translated version of the interview on the newspaper’s website.

Tria also confirmed the government’s goal of decreasing Italy’s debt this year and in 2019, which helped lift Italian bank stocks.

Investors appeared to brush off the G-7 meeting in Quebec, where the U.S.’s relationship with its long-running allies continued to deteriorate. Trump withdrew his support for the group’s communique after Canadian Prime Minister Justin Trudeau repeated his criticism of U.S. tariffs on Canadian metals.

Trump is now preparing for his face-to-face meeting with Kim, the first between a sitting U.S. president and a North Korean leader, which is scheduled for Tuesday at 9 a.m. Singapore time, or 9 p.m. on Monday Eastern Time.

This week, there will be plenty of action from the monetary policy front. The U.S. Federal Reserve is widely expected to increase interest rates on Wednesday, and the European Central Bank expected to discuss when it will begin to end its bond-buying program at its meeting Thursday in Riga, Latvia.

What are analysts saying?

“Thankfully, there is more optimism about the U.S. president’s meeting with North Korean leader Kim Jong Un in Singapore. Potential for a meaningful discussions about denuclearization on the Korean peninsula could [defuse] some of the tensions between U.S. and North Korea, improve the global mood and gain Trump some brownie points after this weekend’s events at the G-7”, said Accendo markets analysts Mike van Dulken and Artjom Hatsaturjants in a Monday note.

Stocks to watch

Italian bank stocks were among winners early Monday, with shares of Italy’s largest lender, UniCredit SpA  up 4.9%, and Intesa Sanpaolo SpA  higher by 4.8%.

Shares in Air France-KLM  were down 1.5% after the airline said Monday that labor unions have called for more strikes in June.

Which economic data is in focus?

The Turkish economy grew by 7.4% in the first quarter, beating forecasts, official data showed Monday.