Europe close: Stocks finish at record highs as global rally continues

(Sharecast News) - European stocks rose for the sixth day on Friday, sending the Stoxx 600 to a new high on the back of decent gains in the banking sector despite a mixed batch of economic data. The pan-European Stoxx 600 index finished 0.5% higher at 570.40, hitting its third record close in as many days.

Most major indices finished with gains, with London's FTSE 100 in particular was up 0.7% at its own all-time high. However, Frankfurt's DAX bucked the trend by dropping into the red by the close with heavyweight Siemens Energy retreating after a strong rise the previous session.

Nevertheless, the overall mood on global markets continued to be one of optimism, helped by yet more record highs on Wall Street as US investors largely shrugged off the ongoing political gridlock in Washington DC. Asian markets also rose strongly overnight as tech stocks jump on the back of further bullish news in the AI space.

"Asian and US equities hit new records with semiconductor names driving the rally. The US market is beginning to look frothy, though, being more expensive than at nearly any point over the last 100 years. Europe is playing catch up but is nonetheless benefitting from the general risk-on mood," said Axel Rudolph, senior technical analyst at IG.

Economic data disappoints

Back on this side of the Pond, the focus was on economic data after the release of a barrage of revisions to service-sector purchasing managers' indices (PMIs).

The HCOB eurozone services PMI was revised down to 51.3 from 51.4, though up from 50.5 and still its highest level in nine months. Revisions to service-sector activity in Germany and France showed weaker-than-expected readings, while numbers in Spain and Italy were revised up.

The HCOB eurozone composite PMI - which tracks both the services and manufacturing sectors combined - increased for the fourth month in a row in September, to 51.2 from 51.0 in August.

Over in the UK, the S&P Global services PMI came in at 50.8 last month, down from the 16-month high of 54.2 in August and lower than the flash reading of 51.9 released last week - marking the weakest rate of growth since April.

Meanwhile, the eurozone producer price index (PPI) fell more than expected in August, according to Eurostat. PPI decreased by 0.3% after a 0.3% increase in July, missing the -0.1% consensus forecast. Compared with August 2024, the PPI was 0.6% lower, marking the first year-on-year decline since November 2024.

Banks provide a boost

Austrian bank Raiffeisen was the standout riser across the continent, gaining 8% on reports that the EU is considering unfreezing sanctions on €2bn of assets linked to Russian oligarch Oleg Deripaska to compensate Raiffeisen for a fine it had to pay in Russia.

Banks from across the region were performing well on Friday, including Spanish lenders Banco de Sabadell and Banco Santander, Germany's Commerzbank and Deutsche Bank, France's BNP Paribas and the UK's Barclays and HSBC.

Industrial stocks like steel manufacturers SSAB and Thyssenkrupp were in demand, extending gains made over recent days on reports that European regulators are considering cutting steel import quotas and raising steel tariffs, raising the outlook for domestic demand.

In London, pubs group JD Wetherspoon underwhelmed with its full-year results, with shares down 5% despite a solid increase in underlying sales and profits. However, the company did say that, despite significant cost inflation, it would "keep price increases to a minimum".