Jan 12 (Reuters) - European shares dipped on Monday as tensions between the U.S. administration and Federal Reserve Chair Jerome Powell turned global markets cautious, and President Donald Trump's
European Stocks Reach All-Time High Amid Geopolitical Tensions
Market Overview and Key Drivers
By Niket Nishant and Avinash P
Sector Performance
Jan 12 (Reuters) - European shares ended Monday's session at a record high, although gains were small as the U.S. government's threat to indict Federal Reserve Chair Jerome Powell renewed investor concerns about central bank independence.
Corporate News and Reactions
The pan-European STOXX 600 ended 0.2% higher at 610.95 points with precious metals companies Aurubis and Fresnillo among biggest sectoral gainers.
Investor Sentiment and Future Outlook
The prospect that U.S. President Donald Trump might be able to force through lower interest rates drove up the price of non-yielding gold, which is also benefiting from safe-haven demand as geopolitical tensions are high.
Germany's DAX added 0.6% to finish at a record high and logged a 10-day winning streak, its longest since August 2024. Most other regional bourses ended flat.
VOLATILITY INDEX RISES TO ITS HIGHEST IN MORE THAN A MONTH
The market is grappling with geopolitical risks, including the U.S. capture of Venezuela and violence in Iran. Defence stocks rose 0.5%, extending gains to seven straight sessions.
Reflecting investor nervousness, the Euro STOXX Volatility index rose 0.68 points to 16.2 - its highest in over a month.
Swissquote senior market analyst Ipek Ozkardeskaya said she expected investment flows to continue into European stocks.
"The sectors that are going to be in focus again are going to be mining stocks due to the debasement trade rising prices of hard commodities including gold, silver, copper or any other hard commodity," she said.
BREWING AND AUTO SECTORS ALSO IN FOCUS
In corporate news, Heineken slid 4.1% to its lowest level in three months after the Dutch brewer announced that its CEO Dolf van den Brink will step down.
Investors weighed quarterly results from the auto sector. Porsche shares dropped 6% on concerns that current estimates for the luxury carmaker's results may be too high, while Volkswagen <VOWG_p.DE> lost 1.3% as vehicle deliveries fell 4.9% in the fourth quarter of 2025.
Banks reversed earlier losses after Trump on Friday called for a one-year cap on credit card interest rates at 10%, starting on January 20, but did not provide details.
"A 10% ceiling on credit-card rates, roughly half today's average interest rate, would upend the basic economics of the industry, forcing lenders to rethink how they manage risk and who they're willing to lend to," said Hargreaves Lansdown senior equity analyst Matt Britzman.
BE Semiconductor Industries advanced 7.3% after the chip equipment supplier reported better-than-expected preliminary orders for the fourth quarter.
Shares of French biotech Abivax pared initial gains and ended up 5% after a media report said U.S. pharma giant Eli Lilly was still interested in buying the company.
(Reporting by Niket Nishant, Avinash P and Johann M Cherian in Bengaluru; Editing by Janane Venkatraman, Shilpi Majumdar and Barbara Lewis)
