European shares rise to fresh two-month peak as oil majors rally

European shares rose on Thursday, supported by gains in energy stocks, while investors digested minutes of the European Central Bank’s (ECB) October meeting where policymakers were cautiously optimistic about inflation falling in the euro zone.

The pan-European Stoxx 600 added 0.3 per cent, extending gains to notch a fresh two-month high. The energy sector led sectoral gains, up 1.4 per cent following two straight sessions of sharp losses.

Also lifting the benchmark index, healthcare stocks rose 0.7 per cent with Novo Nordisk gaining 1 per cent on announcing a $2.3 billion investment to boost production of its wildly popular weight-loss and diabetes drugs.

Euro zone inflation is falling as expected, or even a bit faster, but the European Central Bank must keep the possibility of an interest rate hike on the table, policymakers agreed last month, according to the accounts of their October meeting.

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“The minutes underline the ECB’s more cautious take on the economy and, in fact, mark the next phase of monetary policy tightening: ending rate hikes and focusing on ‘high for longer’,” said Carsten Brzeski, global head of macro at ING Economics, in a note.

Dublin

The marginally improved outlook buoyed bank shares with AIB and Bank of Ireland rising by 0.7 per cent and 1.7 per cent. The State’s largest hotel group Dalata, however, declined by 1.9 per cent. Packaging group Smurfit Kappa added 0.6 per cent, while Ryanair fell 0.9 per cent to €17.48. Paddy Power owner Flutter fell 1 per cent to €146.80.

Europe

Market participants also digested the euro zone Composite Purchasing Managers’ Index data, which showed business activity in the region eased in November and suggested the bloc’s economy will contract again this quarter as consumers continue to rein in spending.

Amsterdam’s AEX rose 0.3 per cent, following a shock election win by the far-right politician Geert Wilders in the Netherlands. “While the Freedom Party’s victory in the Dutch parliamentary election was a big surprise, there is in our view only a very small probability that it will have a substantial impact on financial markets,” said Hubert de Barochez, markets economist at Capital Economics. Meanwhile, Sweden’s main stock index rose 0.5 per cent after its central bank, Riksbank, kept its policy rate on hold at 4 per cent.

Among stocks, Endesa fell 2.4 per cent after the Spanish utility cut its 2023 outlook for profit. France’s LDC added 3.9 per cent after the poultry producer posted a higher first half-year net profit and raised its annual forecast. Analysts pointed to weaker trading volumes as US markets were closed on account of the Thanksgiving holiday.

London

London’s top stock market has gained ground and the pound reached a more than two-month high against the dollar, as new data showed the UK’s private sector returned to growth this month. Energy stocks helped buoy the FTSE 100 on Thursday despite oil prices tumbling further. The blue-chip index gained 14.07 points, or 0.19 per cent, to close at 7,483.58.

It comes as new preliminary data from the closely watched S&P Global/CIPS flash UK PMI survey showed that UK business activity edged up this month, driven by growth for companies in the services sector.

The survey indicated that while recession risks remain, the pause in interest rate hikes has helped inject confidence into some areas of the economy.

In company news, Virgin Money saw its share price slide after the bank revealed its pretax profits tumbled by more than 40% over the latest year, as it set aside some £300 million for expected loan losses.

The group said it expects to see arrears tick up in the new financial year with more customers struggling with loan repayments and credit amid higher interest rates and the cost-of-living squeeze. Its share price was down by 6.5 per cent at close. Shares in Jet2 slipped after the travel firm said it took a £14 million hit from the summer’s air traffic control disruption and wildfires and flooding on Greek islands.

US markets were closed for Thanksgiving. – Additional reporting by Reuters