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European shares climb on luxury boost, key U.S. jobs data in focus

 
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By Khushi Singh and Ankika Biswas

(Reuters) -European shares advanced on Friday boosted by luxury and energy stocks, while investors assessed Germany’s inflation data and waited for a key U.S. employment report to reaffirm expectations of a peak in global interest rates.

The pan-European STOXX 600 index climbed 0.6% by 9: 20 GMT, headed for a fourth straight weekly gain.

Travel and leisure stocks led weekly sectoral gains, while energy and miners were the worst hit.

Latest data showed German inflation eased in November, bolstering the case for a peak in eurozone interest rates.

Investors were focused on the U.S. Labor Department’s report on November non-farm payrolls – due later in the day – for clues on the Federal Reserve’s monetary policy outlook.

“European stocks are catching up with their U.S. peers and we’ve seen the DAX hit record highs. At this point, it looks like the European really is a little bit overstretched,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

The STOXX 600 has gained nearly 11% so far this year, with Germany’s DAX jumping nearly 20%. On the other hand, the United States’ benchmark stock index S&P 500 has gained 19% year-to-date.

“The major drivers in the European market rally are rising expectations that the ECB will start cutting rates next year due to slowing inflation and European economies. We don’t expect cuts before the first half of next year.”

Further, euro area’s benchmark 10-year Bund yield was on track to record its biggest biweekly fall since mid-March on ramped up bets on future ECB rate cuts.

Among major stock movers, Kering (EPA: PRTP) gained 2.9% after the owner of Gucci announced an interim dividend for 2023.

Other luxury giants LVMH and Hermes gained 2.3% and 1.6%, respectively, with the broader sector rising 1.6%.

For the day, travel and leisure shares led sectoral gains, up 1.3%.

Anglo American (JO: AGLJ) shares slumped 4.5% after the global miner aimed to reduce capital expenditure by $1.8 billion across its businesses by 2026 and forecast lower 2024 production.

Sainsbury rose 3% after Goldman Sachs raised the supermarket group’s stock to “buy” from “neutral”.

Vivendi (OTC: VIVHY) climbed 2.4% as the media firm is set to replace Worldline on the CAC40 index, effective from Dec. 18.

Poste Italiane lost 0.8%, with a trader pointing to a media report on the Italian Treasury’s plan to sell its 29.26% stake in the postal service group.

DNB fell 2.9% after UBS downgraded the Norwegian bank to “sell” from “neutral”.

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