European Stocks Close Higher Amid Easing Concerns About Rate Hikes

(RTTNews) - European stocks closed higher on Friday, as data showing a weaker than expected reading on U.S. service sector activity, and a drop in unemployment rate helped ease concerns about any aggressive tightening by the Federal Reserve in the coming months.

Data showing a drop in Eurozone consumer price inflation, and an improvement in eurozone economic confidence contributed as well to the positive mood in the European markets.

The pan European Stoxx 600 gained 1.16%. The U.K.'s FTSE 100 climbed 0.87%, Germany's DAX advanced 1.2% and France's CAC 40 ended stronger by 1.47%, while Switzerland's SMI gained 0.79%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Iceland, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Turkiye closed with sharp to moderate gains, while Russia ended flat.

Shares of mining companies moved higher on hopes for normalization in Chinese economic activity after authorities said that the first wave of infections has hit a peak in cities including Beijing and Tianjin.

In the UK market, Anglo American Plc surged 5.75% and Endeavour Mining climbed 4.3%, while Smurfit Kappa Group, Entain, Antofagasta, Smith (DS), IHG, Johnson Matthey, Glencore, BT Group, JD Sports Fashion, Mondi, Centrica, Ashtead Group, Fresnillo and Rio Tinto gained 2 to 3%.

Rentokil Initial dropped about 3.7%. DCC, Compass Group, Standard Chartered and Pershing Suqare Holdings also ended weak, albeit with less pronounced losses.

In Paris, Renault rallied 3.5%. STMicroElectronics, Safran, Hermes International, Veolia, LVMH, Air Liquide, ArcelorMittal, Michelin, Carrefour and Saint Gobain gained 2 to 3%.

Engie dropped more than 3% and Danone drifted down nearly 2%.

In the German market, Infineon Technologies, Continental, Zalando, BASF, Linde and Fresenius Medical Care gained 2 to 3%.

Fresenius, Covestro, Puma, HelloFresh, MTU Aero Engines, SAP, Vonovia, Munich RE, Bayer and Brenntag also ended notably higher.

In economic news, Eurozone consumer price inflation slowed to a four-month low in December, dropping to 9.2%, from 10.1% in November, after energy price growth eased for the second straight month, preliminary data from Eurostat revealed.

Eurozone economic confidence strengthened to a four-month high in December on widespread improvements across trade, services, industry, and construction and among consumers. The economic confidence index rose more-than-expected to 95.8 in December from 94.0 in November, survey results published by the European Commission showed Friday.

Eurozone retail sales rebounded more-than-expected in November, rising by 0.8% month-on-month, led by an upturn in sales of non-food products, data published by Eurostat showed. Retail sales dropped by 1.5% in October, the biggest monthly decline since December 2021.

Germany's factory orders plunged 5.3% in November from a month earlier, data from Destatis showed. This was the biggest decline since October 2021, when orders slid 6.1%.

The UK construction sector contracted for the first time in four months in December as higher price pressures pulled orders down, a closely watched survey showed Friday.

The S&P/Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell more-than-expected to 48.8 in December from 50.4 in November. The expected reading was 49.6.

Switzerland's retail sales continued to fall in November, data from the Federal Statistical Office showed on Friday. Retail sales adjusted for sales days and holidays fell a working-day adjusted 1.3% year-on-year in November. Sales decreased 2.6% in October.

In U.S. economic news, a report from the Institute for Supply Management showed U.S. service sector activity unexpectedly contracted in the month of December.

The ISM said its services PMI tumbled to 49.6 in December from 56.5 in November, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 55.0.

Data from the Labor Department said non-farm payroll employment jumped by 223,000 jobs in December after surging by a revised 256,000 jobs in November. Economists had expected employment to shoot up by 200,000 jobs compared to the addition of 263,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate edged down to 3.5% in December from a revised 3.6% in November. The unemployment rate was expected to come in unchanged compared to the 3.7% originally reported for the previous month.