European shares eye weekly gain as bond yields ease; inflation data in focus

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(Reuters) -European shares rose on Friday and were set for weekly gains, boosted by healthcare stocks, while investors keenly awaited inflation data for further proof of easing price pressures across the board.

The pan-European STOXX 600 rose 0.9% by 0930 GMT and eyed a weekly rise of 2.8%, boosted by a fall in bond yields on expectations that central banks’ monetary policy tightening has peaked.

Euro zone long-dated yields hit fresh two-month lows on Friday, with money markets fully pricing in 100 basis points rate cuts by the European Central Bank by end-2024.

“When you’ve got growth slowing in the U.S., that’s increasing expectations that central banks around the world will be likely to follow suit,” said Giles Coghlan, chief market analyst at brokerage GCFX.

“With Europe’s growth prospects looking bleak, markets are only naturally starting to look for rate cuts.”

All eyes will be on the euro zone inflation print later in the day, after data throughout the week signalled softening inflation in the United States and the UK.

Nevertheless, some caution around the impact of past rate hikes on economic growth and company earnings also prevailed.

Fresh data showed British retail sales volumes fell unexpectedly in October, in a new warning sign for the economy.

Real estate stocks, often considered as a proxy for bonds, rose 1.8%, leading sectoral gains.

Healthcare gained 1.4%, with heavyweights AstraZeneca (NASDAQ:AZN), Novo Nordisk (NYSE:NVO) and Sanofi (NASDAQ:SNY) gaining between 1.2% and 2.6%.

The euro STOXX Volatility Index, Europe’s equivalent to Wall Street’s VIX, fell to a two-month low, reflecting investor optimism.

Italian asset manager Anima Holding gained 1.5% after signing a binding agreement to acquire all of smaller peer Kairos from Swiss private bank Julius Baer.

Teleperformance SE rose 2.6% after raising 1.4 billion euros of long-term bonds.

Meanwhile, Swedish automaker Volvo (OTC:VLVLY) Cars tanked 10.7% as majority shareholder China’s Geely sold a small part of its stake at a deep discount to the previous day’s closing price.

Assicurazioni Generali (BIT:GASI) lost 1.6% after Italy’s top insurer posted slightly worse-than-expected impact from natural disasters on 9-month results.

Investors also awaited a review of Italy’s ratings, although analysts see little risk that Moody’s (NYSE:MCO) will relegate the country’s debt to junk status, a move that would likely jolt markets around Europe and beyond.

Italy’s FTSE MIB index was up 0.7%.