Feb 25 (Reuters) - European shares rose to a record high on Wednesday, underpinned by a rebound in financials after British bank HSBC raised a key lending target, while concerns that newer AI models
European Markets Surge on HSBC Gains and AI Optimism
By Avinash P, Johann M Cherian and Purvi Agarwal
Feb 25 (Reuters) - European shares closed at a record high on Wednesday, underpinned by a rebound in financials after HSBC raised a key lending target, while concerns that newer AI models might imminently disrupt traditional businesses appeared to ease.
European Stock Market Performance
The pan-European STOXX 600 index ended 0.7% higher at 633.47, eclipsing Friday's record close of 630.56.
Banking stocks gained 2.8%, largely boosted by a near 8% gain in HSBC. Shares of Europe's largest lender hit a record high as it raised a key earnings target after its annual profit exceeded expectations, despite logging a $4.9 billion one-off charge.
Global sentiment also improved after U.S.-based AI startup Anthropic partnered with several companies and launched new AI plug-ins on Tuesday, signalling that traditional businesses are adapting to AI advances rather than facing immediate disruption.
Impact of AI Developments
"The Anthropic news might reinforce hope that AI will integrate with software providers rather than replace them. This could be a powerful message that helps soothe investors who have been caught in an existential crisis about the future of the global economy in the age of AI," said Kathleen Brooks, research director at XTB.
The easing fears helped allay worries over margin pressures and improved risk appetite globally, benefiting vulnerable banks, that saw sharp declines on Tuesday, amid bouts of volatility.
"Volatility is likely to persist in the near term as markets debate and ultimately seek to price the terminal values of companies that could be disrupted by AI, all while assessing the implications of Trump's shifting tariff targets," a group of strategists led by Mark Haefele at UBS said.
Sector Highlights and Company Performances
Meanwhile, mining and utilities stocks each hit an all-time high on Wednesday, passing their previous peaks in 2008, the latest sign of a broadening out of last year's rally in European stocks.
Onshore wind turbine manufacturer Nordex jumped 17.4% to top the STOXX 600 after reporting better-than-expected core profit for 2025.
On the flipside, Diageo lost 12.7% and weighed on the index after the beverage maker cut its annual sales and profit forecast for the second time in four months and also slashed its dividend. The broader food and beverages index slipped 2.1%.
Auto1 Group slumped 18.2% after the German second-hand car dealer forecast lower-than-expected EBITDA for 2026.
Shares of E.ON hit a 15-year high after Europe's largest operator of energy networks said it is raising its spending to 48 billion euros ($57 billion) by 2030 to prepare for data center build-out across Europe.
Investors also monitored developments on the trade front with the possibility of new U.S. tariffs rising up to 15%. AI-chip giant Nvidia's results later on Wednesday will be the next test for markets.
(Reporting by Avinash P, Johann M Cherian and Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips and Shailesh Kuber)
