European Shares Gain On Rate Cut Hopes

European stocks inched higher on Friday amid expectations of interest-rate cuts in the second quarter.

ECB member and Bank of France head Francois Villeroy de Galhau said the central bank should favor gradual rate cuts rather than waiting too long to cut rates this year.
The risk of moving too late exists “at least” as much as that of moving too soon, he said in an interview with Belgian newspaper L’Echo.

In economic releases, data showed U.K. retail sales rebounded by much more than expected in January.

Retail sales surged by 3.4 percent in the month after sliding by 3.3 percent in December. Economists had forecast retail sales to increase by 1.5 percent in January.

Elsewhere, wholesale prices in Germany rose for the first time in four months in January, though they continued to fall compared to the same month last year mainly due to the decline in prices of mineral oil products, preliminary data from the statistical office Destatis revealed.

The wholesale price index rose 0.1 percent from the previous month after a revised 0.6 percent fall in December. This was the first monthly increase since September 2023, when wholesale prices rose 0.2 percent.

The pan European STOXX 600 was up around half a percent at 490.85, hitting a two-year high.

The German DAX climbed 0.7 percent, France’s CAC 40 rose half a percent and the U.K.s FTSE 100 was up 0.7 percent.

Italian energy group ENI SpA fell nearly 2 percent as it revealed earnings for fourth quarter that decreased from the same period last year.

Reinsurance company Swiss Re was down 1.8 percent despite reporting a sharply higher profit for last year, mainly due to improved performance in its property-and-casualty reinsurance segment.

Metso shares soared 10 percent. The Finnish mining equipment maker gave an upbeat outlook after reporting better-than-expected earnings for the fourth quarter.

Belgium’s Umicore declined 2.5 percent after it forecast 2024 core profit below expectations.

Italian financial group Unipol Gruppo surged 21 percent after an announcement that it intends to buy out its unit UnipolSai MIL:US.

Dialight, the global leader in LED lighting for heavy industrial applications, fell nearly 2 percent on news that Fariyal Khanbabi has decided to step down as Chief Executive Officer and as a director of the company with immediate effect.

NatWest Group rose over 2 percent as the bank announced its biggest annual profit last year since the 2007 financial crisis.

Warehousing group Segro added 1.3 percent after narrowing its FY23 loss before tax on rent growth and strong occupier demand.

German automotive supplier Hella fell about 2 percent despite posting improved full-year portfolio-adjusted sales and operating income.

Volkswagen gained 1 percent after signing a supply agreement with India’s Mahindra & Mahindra on the use of key electric components of the German carmaker’s open platform for electric vehicles (EVs).