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Updated December 29th, 2023 at 20:03 IST

European stocks rally, aiming for annual gains

Market surge began in December and suggested consideration of interest rate cuts in the forthcoming year.

Business Desk
European Stocks
European Stocks | Image:Pexels
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European markets showed resilience and upward momentum on Friday, notably bolstered by gains in the media and energy sectors, hinting at robust annual gains, driven by the prospects of a more lenient monetary policy by key central banks in the upcoming year.

The pan-European STOXX 600 exhibited a 0.3 per cent increase by 0919 GMT, positioning itself for a seventh consecutive weekly gain and marking its most impressive December performance since 2021.

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The recent surge across global markets began in mid-December after indications from the U.S. Federal Reserve suggested a potential consideration of interest rate cuts in the forthcoming year. Contrarily, the European Central Bank (ECB) hasn't communicated a similar inclination, yet market optimism prevails.

Despite this, the STOXX 600 is on course for nearly a 13 per cent surge this year, with technology and retail sectors emerging as the leading performers in the market landscape.

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European market rebound

Having rebounded by over 12 per cent from its March lows, precipitated by the rapid collapse of Swiss lender Credit Suisse and US mid-sized lender Silicon Valley Bank, the European benchmark has showcased resilience and recovery.

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Italian shares notably outpaced their regional counterparts, demonstrating an almost 30 per cent year-to-date rise, while Swiss and British indices lagged behind.

Friday's session witnessed a 0.4 per cent increase in media stocks and a 0.5 per cent rise in personal and household goods, marking their first ascent in five sessions. Additionally, heavyweight energy stocks recorded a 0.4 per cent gain, mirroring the upward trajectory of crude oil prices.

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Inflation dip impact

Spanish stocks saw a 0.3 per cent uptick after preliminary data revealed a slight decline in the 12-month inflation rate for December, dropping to 3.1 per cent from November's 3.2 per cent.

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Meanwhile, British mortgage lender Nationwide reported a larger-than-expected 1.8 per cent decline in house prices over the 12 months to December, prompting Andrew Wishart, senior property economist at Capital Economics, to suggest a potential stabilisation or even a rise in house prices next year, especially with declining mortgage rates.

The UK's FTSE 100 index edged up 0.2 per cent as markets anticipated light volumes on the year's final trading day, anticipating closures across European bourses on January 1 due to the New Year holiday.

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(With Reuters inputs)

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Published December 29th, 2023 at 20:03 IST

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