European shares rebound, euro set for best month in a decade

European shares recovered from their lowest levels in a month on Friday, as investors looked past a severe economic contraction in Germany and on to company earnings, while the euro reached its highest in more than two years, set for its best month in a decade.

Reuters reports the pan-European STOXX 600 rose 0.74%, though it was on course to end the month flat or lower. Technology shares SX8P > propped up the rally, rising 1.6% after Wall Street’s tech giants, Apple, Amazon and Facebook , reported forecast-beating results overnight.

MSCI’s All Country World Index, which tracks shares across 49 countries, was up 0.1% on the day. Germany’s (-10.1%) and France’s ( -13.8%) numbers have already shaped expectations around the magnitude of the 2Q slump in the aggregated eurozone economy,” ING strategists said in a note to clients.

“Markets will therefore focus on assessing the slowdown in the Italian and Spanish economies, which were among the first and worst-hit countries in the pandemic.”

They added the euro could hit $1.20 within the next few days. The single currency passed $1.19 on Friday. EUR=EBS

The dollar was set for its worst month in a decade against a basket of currencies, as abysmal economic data for the second quarter and rising global COVID-19 cases darkened the mood. The dollar index =USD dropped 0.1% to 92.699 .DXY [FRX/]

Expectations the U.S. Federal Reserve will maintain its ultra-loose monetary policy for years also depressed the dollar.

U.S. gross domestic product plunged 32.9% in the second quarter, the biggest decline on record. Jobless claims rose last week, another sign the economic recovery has slowed.