European Stocks Close Broadly Higher On Rate Cut Hopes

(RTTNews) - European stocks closed broadly higher on Wednesday after data from the U.K. showing lower-than-expected inflation raising prospects of the Bank of England announcing a rate cut by March next year aided sentiment.

Also, despite hawkish comments from some Fed officials, analysts expect the U.S. central bank to lower interest rates at least three times in the coming year.

The pan European Stoxx 600 gained 0.19%. The U.K.'s FTSE 100 climbed 1.02% and France's CAC 40 ended 0.12% up, while Germany's DAX and Switzerland's SMI edged down 0.07% and 0.01%, respectively.

Among other markets in Europe, Austria, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Russia and Sweden ended higher.

Belgium, Norway, Poland, Portugal and Turkiye closed weak, while Spain ended flat.

In the UK market, Intertek and Segro both gained about 3.6%. Flutter Entertainment, Barclays Group, ITV, Kingfisher, Land Securities, Hikma Pharmaceuticals and Legal & General climbed 2 to 3%.

BT, Compass Group, BAE Systems and B&M European Value Retail all ended nearly 2% up. Rentokil Initial, Pennon, Bunzl, Persimmon, DCC, Johnson Matthey, Lloyds Banking and Schrodders also ended notably higher.

Petrofac, a provider of services to the energy industry, soared more than 45% after winning a $1.4 billion contract under its multi-year deal with TenneT.

In the German market, Siemens Energy gained 3.3%. Fresenius, Deutsche Bank, Fresenius Medical Care, Adidas, Vonovia and Bayer ended higher by 1 to 2.3%.

Deutsche Post ended down 2% after U.S. peer FedEx cut its full-year revenue forecast.

SAP, Merck, Infineon and Siemens Healthineers also closed weak.

In Paris, Edenred gained nearly 2%. Teleperformance, Eurofins Scientific, Publicis Groupe, Unibail Rodamco, BNP Paribas, Saint Gobain and Engie ended higher by 1 to 1.6%.

WorldLine dropped more than 3%. Renault, Safran and Airbus Group ended down 1.3 to 1.6%.

Shares of Spanish multinational telecommunications company Telefonica gained more than 3% after the Spanish government said it would buy a 10% stake in the telecoms giant.

On the economic front, data showed U.K. consumer price inflation reached its lowest level in more than two years in November, increased bets for interest-rate cut next year by the Bank of England (BoE).

The consumer price index showed an annual increase of 3.9%, slower than the 4.6% rise in October. This was the weakest inflation since September 2021 and also below economists' forecast of 4.4%.

Another report revealed that input prices decreased 2.6% annually, the same pace of decline as seen in October. Factory gate prices dropped 0.2% following a revised fall of 0.3% in October.

According to the results of a survey by the ifo institute, more companies in Germany wanted to raise prices in the coming months, suggesting that the current easing trend in inflation is likely to stall.

The ifo price expectations rose to 19.7 points in December from 18.1 points in November. The reading indicates the percentage of companies that intend to increase prices on balance.

Meanwhile, Germany's producer prices declined for the fifth straight month in November due to cheaper energy costs, Destatis reported.

Producer prices dropped 7.9% year-over-year in November, slower than the 11% fall in October. Economists had expected a decline of 7.5%.

Germany's consumer sentiment is set to strengthen at the start of next year amid improvements in both income and economic expectations, and the willingness to buy, survey results from the market research group GfK and the Nuremberg Institute for Market Decisions (NIM) showed.

The forward-looking GfK consumer confidence index rose to -25.1 from a revised -27.6 in December. Economists had forecast a reading of -27.0.