Tech Rally Lifts STOXX 600 to Near Weekly High
By Joao Manuel Vicente Mauricio, Ankika Biswas and Pranav Kashyap
(Reuters) -Europe's STOXX 600 ended the week on a high note, bolstered by a rally in tech stocks, while investors analysed the euro zone inflation report to assess the likelihood of a larger interest rate cut in December.
The pan-European main stock index reversed earlier losses and was up 0.6% at 510.25 points on Friday, logging its first monthly gain since August. It rose 1% in November. On a weekly basis, it logged a modest 0.2% decline.
Technology stocks were the biggest boost to the index, gaining 1.6%.
Trading volumes were expected to be low, with the U.S. equity market open for half a day following the Thanksgiving holiday on Thursday.
Euro zone flash inflation rose to 2.3% on a yearly basis in November, in line with forecasts.
Markets are now pricing in a more than 80% chance of a 25 basis-point cut at the European Central Bank's meeting on December 12.
Capital Economics' analysts think the case for a 50 basis point cut still remains strong. "Data released this week suggest that the euro-zone economy is struggling," they said in a note.
While the STOXX 600 has achieved a modest monthly gain over three months, it significantly lagged behind the U.S. S&P 500. Investor sentiment towards the European bloc was dampened by several factors, including the potential for U.S. tariffs, political uncertainty in France, and geopolitical tensions.
Auto stocks were among the worst hit in November, knocked down by concerns that U.S. President-elect Donald Trump's proposed tariffs on Mexico could be more damaging for European car makers than any direct tariffs on EU goods.
Defence stocks on the other hand, gained the most among sectors, largely due to the Russia-Ukraine conflict.
France's CAC 40 has been one of the worst-performing bourses in the region so far this month due to the country's political uncertainty.
Prime Minister Michel Barnier dropped plans to raise electricity taxes in his 2025 budget, bowing to far-right pressure. The budget woes had pushed France's borrowing costs to match those of Greece for the first time on Thursday.
The basic resources sub-index gained 1.6%, driven by a 5.4% rise in miner Anglo American following a Jefferies' rating upgrade to "buy" from "hold".
BAE Systems lost nearly 5% after BofA Global downgraded the defence firm to "underperform" from "neutral".
French inflation for November edged up from last month, as expected, while German retail sales fell more than anticipated in October.
(Reporting by Joao Manuel Mauricio in Gdansk and Ankika Biswas, Pranav Kashyap in Bengaluru; Editing by Janane Venkatraman, Sherry Jacob-Phillips, William Maclean)
