European shares gain on miners, energy boost; eye fifth weekly gain since April

By Ankika Biswas

(Reuters) -Energy and miners led European shares higher on the final day of a week marked by major central bank policy decisions, in which the U.S. Federal Reserve set the tone for market expectations about interest rate cuts being on the horizon.

The pan-European was up 0.4% by 0903 GMT, on track for its fifth straight weekly advance since April.

Both miners and energy stocks rose more than 1%, leading sectoral gains for the day. For the week, real estate stocks were the top gainers, while telecommunication took the worst hit.

On the policy front, the Fed stood out, signalling lower borrowing costs in 2024, while the European Central Bank held rates steady, pushing back against rate-cut bets.

“Our economists see… the hawkish tilt of yesterday’s (Thursday) meeting as reducing the risk of the ECB cutting as soon as March, but retain their view of rate cuts starting in April with 150 bps of cuts by the end of next year,” Deutsche Bank said in a note.

Barclays, too, anticipates a 25-basis-point ECB rate cut in April and consecutive cuts in each policy meeting until January 2025.

Meanwhile, policymaker Francois Villeroy de Galhau said although the ECB’s next move should be lowering rates, it should first “enjoy the view” for a while.

Economic concerns were underscored by weak data showing Germany’s economic downturn worsened this month, pointing to a recession in Europe’s biggest economy at the year-end, and French business activity declined faster than expected in December.

The German benchmark and France’s CAC-40 were up 0.6% and 0.4%, respectively, after hitting record highs on Thursday.

Swedish technology firm Sectra jumped 14.8% following second-quarter results.

Stockholm-listed receipts of Millicom gained 4.1% after the telecom group raised its target and launched a share buyback program.

EQT (ST:) rose 4.8% after J.P. Morgan upgraded the Swedish private equity firm to “neutral” from “underweight”.

Munich Re climbed 1.3% with the German reinsurer targeting 5 billion euros in net profit for next year.

Groupe SEB rose 3% after the France-based household equipment maker held its capital markets day, which according to analysts provided comfort to shareholders.

Symrise lost 9.9% to hit the bottom of the STOXX 600 after the German flavour and fragrance maker cut its full-year EBITDA margin guidance.

Campari (LON:) dropped 2.4% after the Italian spirits group announced its biggest-ever acquisition to buy French cognac house Courvoisier for $1.2 billion.

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