China rally propels STOXX 600 to near record high

By Pranav Kashyap

(Reuters) -European shares jumped on Thursday, buoyed by optimism over fresh stimulus measures from China, while investors awaited remarks from the European Central Bank president.

The pan-European index jumped 1.2% to 525.44, just shy of its record high of 526.66.

Chinese leaders pledged to deploy “necessary fiscal spending” to meet this year’s economic growth target of roughly 5%.

Chinese stocks soared, with the CSI300 blue-chip index and Hong Kong’s both surging over 4%.

“There’s optimism that China could offer more stimulus in future, and in that case we could see this rally sustain,” said Fiona Cincotta, senior market analyst at City Index.

Luxury stocks lifted the benchmark, with LVMH, Hermes, Dior, Kering (EPA:) and Burberry rising between 5% and 7%.

European luxury firms rely heavily on Chinese consumer spending.

China is also reportedly considering injecting up to 1 trillion yuan ($142.39 billion) of capital into its top banks to increase their capacity in a bid to support its struggling economy.

Europe’s technology sector also added to the gains, rising 3.1% as shares of European semiconductor companies jumped after Micron Technology (NASDAQ:) forecast higher-than-expected revenue on AI demand.

A nearly 4% rise in the basic resources sector also supported, as prices rose. [MET/L]

Bucking the trend, oil stocks were the biggest drag, losing 2.4% as oil prices fell on news of top exporter Saudi Arabia giving up its price target. [O/R]

Investors awaited remarks from several ECB board members set to speak later in the day, with President Christine Lagarde’s comments, scheduled for 1330 GMT, taking the spotlight.

“The market focus will be on comments that could be related to the growth outlook for the region particularly after the disappointing PMI data. A deteriorating outlook could put a dampener on sentiment,” Cincotta added.

The Swiss National Bank cut interest rates by 25 basis points, marking its third such reduction this year. The Swiss benchmark SMI gained 0.6%.

H&M (ST:) dropped 4.1% after the world’s second-largest listed fashion retailer said it no longer expected to reach its full-year earnings margin goal, while reporting a lower-than-expected operating profit for the third quarter.

Across the pond, a series of speeches by officials of the Federal Reserve are due, with remarks from Chair Jerome Powell taking centre-stage.

City Index’s Cincotta said the U.S. jobless claims data due later in the day has the potential to move the market if there are any surprises.