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Europe close: Defence stocks lead markets higher

(Sharecast News) - European stocks put in a decent performance on Friday, rebounding after three straight days of losses, as investors digested a barrage of mixed global economic data and the start of corporate earnings season in the US. The pan-European Stoxx 600 index rose 0.8% to 477, with gains across all major equity indices, with defence and aerospace stocks leading the risers. Markets received an extra boost in afternoon trade after data showed that US producer prices unexpectedly fell last month.

"A downside miss in US PPI for December has once again pulled forward speculation about central bank rate cuts, acting as a drag on US, UK and German two-year yields across the board," said analyst Michael Hewson from CMC Markets UK.

In economic data on Friday, UK GDP rebounded by 0.3% in November after a 0.3% decline the previous month; China's trade surplus rose more than expected as export growth picked up; while US producer prices fell by 0.1% with core annual PPI inflation dropping to its lowest in over two years.

Over on Wall Street, markets opened in the red after American banks mostly disappointed with their fourth-quarter earnings, with Citigroup making headlines on the back of plans to cut 10% of its workforce.

Meanwhile, oil prices rose on the back of rising geopolitical tensions as Iran reportedly captured an oil tanker off the coast of Oman in response to sanctions and US and UK airstrikes on rebel Houthi targets in Yemen also caused concern among commodity traders. Brent crude was up 1.5% at $78.53 a barrel by the close in Europe, touching a high of $80.75 earlier on.

Airline and luxury stocks fall

Airline stocks across the US and Europe were flying lower on Friday after American carrier Delta cut its earnings guidance for the full year. Delta, the first US carrier to report its fourth-quarter results this earnings season, called 2023 a "great year" in terms of its operational and financial performance, but guided to earnings per share of between $6 and $7 for 2024, under the $7 guidance it gave last year.

IAG, Air France-KLM and Deutsche Lufthansa were all trading with losses of 2-3%.

Plane maker Airbus, however, was extending gains made the previous session after announcing an 11% increase in aircraft deliveries in 2023 on the back of a record year for gross orders.

The whole defence and aerospace sector was performing well on the back of heightened geopolitical tensions in the Middle Ease. BAE Systems, Safran, Thales and Rolls-Royce were all firmly higher.

Luxury fashion group Burberry tumbled 5% as it delivered a significant profit warning on the back of the well-cited slowdown in luxury demand that has rocked the industry over recent months. Hermes, Christian Dior, Kering and Prada all finished int he red.

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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