European shares retreated from record highs hit earlier on Friday as caution prevailed ahead of crucial US data, although gains in Moncler and luxury stocks limited further price declines.
The pan-European STOXX 600 index remained firm at 526.32 points. The benchmark index hit an all-time high of 526.72 points early in the session and is on track to post its best week in more than a month, if gains hold.
Investors might wonder if there is enough momentum to go higher after hitting those all-time highs, said Daniela Hathorn, senior market analyst at Capital.com.
“We may see a little bit of consolidation from here.”
Overall gains were muted due to investor caution as markets awaited the core U.S. personal consumption expenditure (PCE) price index – the Federal Reserve’s preferred measure of inflation – due later. in the day.
Shares in Italy’s Moncler rose 11.8 percent after CEO Ruffini reached a deal with LVMH, which will see the retailer partner with Ruffini for an expanded investment in the luxury group.
The region’s personal and household goods sector supported the index with a 1.6 percent jump.
News about China stimulus significantly boosted the benchmark STOXX 600 index this week, underscoring the crucial role of Chinese consumers for European companies.
Hours earlier, China’s central bank reduced the borrowing cost of its reverse repurchase agreements to seven days, as part of the largest stimulus package since the pandemic.
China-focused luxury stocks rose, with shares of LVMH, Hermes, Kering, Hugo Boss and Burberry gaining between 2 and 4 percent.
Gains in auto stocks provided support as European luxury carmakers with significant exposure to the Chinese market tend to benefit from increased consumer spending due to stimulus.
“China had been pushed to second base… This (surge) puts into perspective how much Chinese consumers matter to Europe,” Hathorn said.
Chinese stocks are heading for their best week since 2008.
French consumer prices rose less than expected in September, according to CPI figures. The CAC 40 index rose 0.1 percent.
Spain’s IBEX 35 was trading flat after data indicated the country’s inflation dropped to 1.7 percent.
According to data, German unemployment rose more than expected in September. Still, the DAX index rose 0.2 percent to 19,292.20.
Investors are also keeping an eye on euro zone consumer confidence figures, due out at 0900 GMT. European Central Bank chief economist Philip Lane will speak on fiscal policy at 0815 GMT.
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