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Europe close: Stocks rise despite mixed data, geopolitics

(Sharecast News) - European shares advanced at the start of the week even after it was announced that eurozone retail sales fell and as investors fretted about the Israel-Hamas war escalating into a wider conflict. The pan-European Stoxx 600 index was ahead by 0.38% at 478.18.

Germany's DAX paced gains following some upbeat trade data, although factory orders missed forecasts.

Meanwhile, France`s Cac-40 added 0.74% to 16,716.47, while the FTSE Mib gained 0.42% to 30,569.92.

Investors were also looking ahead to US inflation data and major bank earnings that were due out during the week ahead for further clues on the state of America's economy and the path of rate cuts from the Federal Reserve.

The December U.S. consumer price index was set for release on Thursday, while the producer price index was scheduled to be published on Friday.

"Wariness has returned at the start of the week, as investors assess the risks of geo-political conflict, amid fresh signs of global economic slowdown and uncertainty about the trajectory of inflation," said Hargreaves Lansdown economist Susannah Streeter.

"Such are the risks of the Israel-Gaza conflict widening, US Secretary of State Antony Blinken has embarked on a whistlestop diplomatic tour, in an attempt to calm inflamed tensions.

"It comes after Israel's defence minister described the hostilities the country is facing as an axis rather than a single enemy. Concerns are rising that this could lead to fresh violence, particularly in Lebanon."

On the economics front, eurozone retail sales fell 0.3% in November, according to Eurostat, cutting into October's upwardly revised 0.4% jump and marking the sharpest decline in retail sales volumes since August.

On an annualised basis, retail sales fell 1.1% year-on-year for a 14th consecutive period of contraction.

In Germany, the trade surplus jumped in November after a huge rise in monthly exports smashed economists' forecasts.

Germany exported a total of €131.2bn in overseas sales of goods during the month of November on a calendar and seasonally adjusted basis, up 3.7% from October.

The trade balance came in at €20.4bn (consensus: €17.9bn), up from €17.7bn in October and much higher than the €11.9bn surplus registered in November 2022.

However, factory orders increased by less than expected in November, according to provisional figures released on Monday by the Federal Statistical Office, Destatis.

Price adjusted new orders in manufacturing rose by just 0.3% in the month of November, rebounding slightly after a revised 3.8% slump in October but well below the 1% increase expected by economists.

In equity news, Danish jewellery maker Pandora said on Sunday its revenue growth and earnings in 2023 had exceeded the group's expectation, lifted by strong demand and "solid profitability" in the final months of the year.

Energy giant Shell was weaker as it flagged fourth-quarter impairments of up to $4.5bn, primarily in its chemicals and products division. The oil major, updating on fourth-quarter trading, said non-cash post-tax impairments were expected to be between $2.5bn and $4.5bn.

Housebuilders were in focus as Barclays upped Bellway to 'overweight, but cut Barratt Developments and Berkeley to 'equalweight'.

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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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