* FTSEurofirst 300 up 0.7 percent, German DAX at record
* Summers withdraws from Fed race, dove Yellen new favourite
* Airlines advance, oil price drops on Syria deal
By Alistair Smout
LONDON, Sept 16 European stocks hit five-year
highs on Monday after news that Lawrence Summers has pulled out
of the race to lead the U.S. Federal Reserve, while an
international deal over Syria also boosted risk appetite.
The FTSEurofirst 300 hit an intraday high at
1,262.25, its highest level since mid-2008, while Germany's DAX
hit 8626.11 - an all-time high.
Investors took the view that Summers' decision meant a more
gradual approach to policy tightening, as he had been seen as
less supportive of the bank's monetary stimulus programme than
the other main candidate, Janet Yellen.
However, the news on Summers is seen as having little
bearing on a Fed meeting this week where the bank is expected to
start reining in its bond-buying.
Demand for equities was also boosted by an international
deal to destroy Syria's chemical arsenal, which put off a
U.S.-led attack against the country and allayed concerns of a
broader conflict in the oil-producing Middle East.
"The market has moved on two reasons. There's a relief rally
on the latest Syrian news, but also Yellen is seen to be more
dovish and pro-quantitative easing... Consequently it's good for
the equity markets," said James Butterfill, global equity
strategist at Coutts.
The FTSEurofirst closed up 0.7 percent at 1,258.42, a five
year closing high, while the Dax closed at an all-time closing
high, up 1.2 percent to 8,613.
Both indexes ascended beyond their May peaks to post the new
highs. In the case of the DAX, the top German index has added
3.9 percent since the beginning of last week.
Easing supply concerns pushed down oil prices, with Brent
crude for delivery in November down 1.5 percent, while
airline stocks notched up gains, led by Air France and
IAG up 5.5 percent and 3.3 percent respectively.
"If Syria really is resolved as it appears that it might be,
there's a good chance that we could see energy prices come back
significantly. You could even see (Brent) pull back to the $100
a barrel mark," Matt Basi, sales trader at CMC Markets, said.
"At that price point I think you'd really start to see
airlines being able to hedge their risk quite effectively and
just lock in long-term contracts at those rates."