European shares rise on last trading day of the year, set for annual gain

By Shashwat Chauhan

(Reuters) -European shares advanced on Friday, with media and energy companies among the top gainers, setting the index up for strong yearly gains on hopes of a softer monetary policy from major central banks next year.

The pan-European added 0.3% by 0919 GMT and was on track for its seventh straight weekly gain as well as its best December performance since 2021.

Global markets have rallied since mid-December when the U.S. Federal Reserve hinted that it could consider interest rate cuts next year. However, the European Central Bank (ECB) has not given a similar outlook.

Nonetheless, the STOXX 600 is headed for a near 13% advance this year, with technology and retail among the best-performing sectors.

The European benchmark has recovered over 12% from its March-lows when global markets were rattled following the swift collapse of Swiss lender Credit Suisse and U.S. mid-sized lender Silicon Valley Bank.

Italian shares outpaced their regional peers this year, with an almost 30% year-to-date rise, while Swiss and British indexes were the laggards.

On Friday, media stocks rose 0.4%, while personal and household goods added 0.5% in their first gain in five sessions.

Heavyweight energy stocks gained 0.4% tracking higher prices. [O/R]

Spanish stocks advanced 0.3% after a preliminary reading showed the 12-month inflation rate fell to 3.1% in December, from 3.2% in the period through November.

Separately, mortgage lender Nationwide said British house prices fell by 1.8% in the 12 months to December, logging a bigger than expected drop.

“Unchanged house prices in December ensured that over the course of 2023 they fell by much less than forecasters had expected,” Andrew Wishart, senior property economist at Capital Economics, said.

“With mortgage rates falling, it is increasingly likely that house prices avoid falls altogether next year.”

UK’s blue-chip was last up 0.2%. ()

Volumes are expected to be light on the last trading day of the year, with bourses across Europe to remain shut on Jan. 1 on account of the New Year holiday.