Europe open: Shares up as investors digest rate commentary from central banks

(Sharecast News) - European shares made a positive start to Friday's session as investors digested commentary from central banks on the outlook for interest rates next year. The pan-European Stoxx 600 was up 0.28% at 477.88 in early deals with major bourses higher.

On Wednesday saw the US Federal Reserve held rates but sparked a rally when it said it was considering at least three cuts next year.

On Thursday, the Bank of England and the European Central Bank also kept rates unchanged, but the BoE moved swiftly to dampen hopes of a reduction saying monetary policy is "likely to need to be restrictive for an extended period of time".

The ECB also revised down its growth and inflation forecasts for the euro area and unveiled plans to speed up the shrinking of its balance sheet.

"Investors are chewing through an enormous amount of data from central banks in recent days, with the pause button for interest rates still the go-to. The pressure could be mounting though, as markets are still largely behaving as though these pauses are pivots, but it's likely that cuts are further away than investors are expecting," said Hargreaves Lansdown analyst Sophie Lund-Yates.

"The huge resilience of economies so far has been a pleasant surprise, but that doesn't mean challenges aren't coming down the tracks, and recessions, and earnings shocks, can't be ruled out just yet."

In economic news, China's November industrial output expanded at the its fastest pace since February 2022, although retail sales figures were weaker than expected as the world's second-largest economy continued to stumble towards recovery.

Industrial output grew by 6.6% in November on an annual basis, beating expectations for 5.6%. Retail sales were up 10.1% last month, although analysts had expected a 12.5% spike following a low base in 2022 when the country was in the grip of of stringent zero-Covid curbs in the last quarter of the year.

Fixed asset investment in urban areas cumulatively grew 2.9% in the first 11 months of the year, compared to expectations for 3% growth.

In equity news, shares in IT firm Atos surged after major shareholder Onepoint raised its stake in the company to 11%.4 from 9.9% and said it plans to keep buying stock and seek board representation.

German fragrance and flavour maker Symrise fell after cutting its fiscal year 2023 outlook, citing lower raw material prices and exchange rates.

Reporting by Frank Prenesti for Sharecast.com