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European stocks jumped on Friday, led by gains in energy and retail sectors after the Federal Reserve said there would be no imminent move to tighten monetary policy, easing fears of rising U.S. inflation that pushed the STOXX 600 index into negative territory for the week.

The pan-European STOXX 600 index rose 1.1%, with oil & gas and retail stocks leading the gains. The benchmark still fell 0.5% for the week as a rally in commodity prices and signs of quickening U.S. inflation raised fears about an earlier-than-expected interest rate hike by the U.S. Federal Reserve. However, sentiment improved on the U.S. Federal Reserve’s reassurances on monetary policy, as it also said it would not immediately reduce cash injections that have propped up financial markets. But more importantly, valuation of markets and the valuations have favoured Europe for a number of years because it is more economically sensitive.

Separately, Bank of America’s weekly fund flow statistics showed that investors pulled out of tech equity funds and loaded up on inflation protection in the week ended May 12.Minutes from the European Central Bank’s latest policy meeting showed policymakers set the stage for a June 10 showdown over the future of their emergency bond purchases when they met in April, but stopped short of discussing their next move.

Several European countries are capping some of the frothiest hedge fund orders of sovereign debt. This is understandable as issuers like to sell to investors who’ll hold their bonds for a longer period, and the current free-for-all makes it hard to tell the keepers from the hit-and-run crowd. Given the rampant demand for high-quality debt, genuine buyers often feel cut out of the process.

In a vivid example of the wall of money chasing new bonds, a two-tranche deal in October for the European Union received 233 billion euros ($283 billion) of orders for 17 billion euros of bonds sold. And as an example of the flakiness of buyer commitment, the order book on a 10-year deal for Spain in January more than halved from a peak of 130 billion euros as the terms were tightened. No wonder sovereign issuers want more sense of control over who’s buying their debt. There’s certainly scope to improve an inefficient and opaque new-issues market that gives too much power to those in charge of the sales process: the investment banks and specifically the lead bank on the deal. Almost all syndicated deals (where governments bring in a panel of banks to run the sale) use the so-called “pot system” where — in theory — all members of the panel see all the orders. However, the decision on how much to allocate to each buyer is still usually made by one bank.

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