European shares rose on Friday, boosted by gains in healthcare and energy firms, as optimism over the outlook for the region’s economy overshadowed concerns about US interest rates staying elevated for longer than expected.
The pan-European STOXX 600 reversed early losses and closed up 0.34 percent at 460.77, its highest since April last year. The index notched gains for the second straight week, rising 1.23 percent from last week.
London’s blue-chip FTSE 100 briefly hit a new record high on Friday, marking a potential turning point for UK assets. The index closed up 1.04 percent at 7,901.80, gaining 1.76 percent weekly.
European equities rallied in the previous session on hopes that the global rate-hiking cycle was close to an end, even as the European Central Bank stayed hawkish.
A US Department of Labor report released on Friday showing solid job additions last month has weighed on such hopes, as a persistently tight labor market could allow the US Federal Reserve to keep interest rates higher for longer.
However, analysts said the report also pointed to signs of resilience in the US economy, which could alleviate some fears of a steep downturn.
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In the eurozone, business activity bounced back to growth last month, suggesting the bloc’s economy might again escape a contraction this quarter and that the upturn might accelerate.
Another report showed that eurozone producer prices decelerated year-on-year in December.
“You still have an economy holding up exceptionally well, particularly in the jobs market, and you have an earnings season that has not been so bad in Europe so far,” Moneyfarm quantitative analyst Giorgio Broggi said.
“If inflation continues to stay under control in Europe and the US, then you expect a world where good news is good news, which means if the economy holds up, markets will do well,” he said.
Healthcare stocks led gains on the STOXX 600, rising 1.5 percent on a boost from shares of large drugmakers such as Novo Nordisk A/S and Roche Holding AG.
However, French drugmaker Sanofi SA fell 1.9 percent after forecasting moderate earnings growth for this year.
Energy stocks rose 1 percent, tracking crude prices higher as investors weighed demand recovery in top consumer China, while some consumer staple stocks also lent a boost to the STOXX 600.
Dutch navigation and digital mapping company TomTom NV gained 4.6 percent after raising its guidance for the year.
Spain’s CaixaBank SA fell 2.7 percent as higher loan loss provisions overshadowed the Spanish bank’s full-year results.
Casino Guichard-Perrachon SA fell 3.6 percent after analysts flagged that talks with Teract SA to combine French retail activities would not address the supermarket group’s urgent need to slash debt.
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