Europe close: Stoxx 600 edges higher, but London stocks outperform

(Sharecast News) - European stock markets finished in a mixed fashion on Wednesday, with only mild gains for the Stoxx 600, though the FTSE 100 outperformed the rest of the continent after data showed a bigger-than-expected drop in inflation. London's benchmark index finished up 1.1% at 7,724, its highest level since mid-September, after UK inflation slowed in November to 3.9%, down from 4.6% in October, adding pressure on the BoE for a cut in rates next year.

Policymakers held the benchmark base rate at 5.25% last week and then set about dampening expectations of any easing, saying monetary policy was likely to stay tight for an extended period of time.

"The drop in UK CPI delivered a timely Christmas present for the FTSE 100, taking it back to 7700 and making it the strong performer of the day," said analyst Chris Beauchamp from IG.

"While GBP bulls won't like to see the drop in price inflation, for investors in UK plc there is hope that next year will bring more good news, in the form of rate cuts that can give the FTSE 100 a further boost."

However, 0.1% falls in Frankfurt and Madrid, a flat performance in Milan and just a 0.1% gain in Paris meant that the pan-European Stoxx 600 finished just 0.2% higher at 477.94 - though that was its highest finish since mid-January 2022.

A barrage of other European economic data was keeping traders busy on Wednesday: German producer prices fell more than expected in November, down 7.9% year on year; eurozone construction output dropped by 1% in October; while the GfK German consumer sentiment index rose to -25.1 from -27.6 but still remained weak.

In other news, Brent crude rose a further 0.9% to $79.92 a barrel on Wednesday, having jumped around $7 in the past week, on the back of supply-chain fears in the Red Sea as a result of disruption caused by Yemen's Houthi rebels.

Raiffesisen soars

Shares in Raiffeisen Bank surged 13% after a deal to buy a 28% stake in Austria's Strabag, one of the largest construction companies in Europe, from Russian oligarch Oleg Deripaska in a move that would work around EU sanctions.

Argenx shares plunged by 26% after the pharmaceutical company said its only medicine was seen to not help patients with a rare skin disorder.

Telefonica rose 3% after the Spanish government said it plans to buy a stake in the carrier worth as much as $2.2bn. Other telecom stocks such as United Internet AG and Telecom Italia also finished with decent gains.

In London, Intertek was the standout performer, up 4%, after Exane BNP Paribas upgraded the shares to 'outperform' from 'underperform' as it said it sees 20% upside from a re-rating as the market prices in stronger mid-term earnings per share growth.

Just eight stocks on the FTSE 100 finished in the red, as inflation data boosted sentiment, with retailers and grocers such as Ocado, M&S, Kingfisher and B&M among the biggest risers.