© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 11, 2023. REUTERS/Staff/File photo
By Sruthi Shankar
(Reuters) -European stocks hit three-week highs on Thursday, supported by a fresh round of declines in Treasury yields as investors took comfort from dovish views from Federal Reserve officials.
The pan-European index climbed 0.8%, with all major subsectors barring telecoms and banks rising.
Media stocks jumped 1.2% to a fresh 22-year high, with advertising group Publicis hitting a record high after raising its 2023 sales and margin forecasts.
Wall Street closed higher on Wednesday after minutes of the Fed’s last meeting showing caution among policymakers that helped fuel hopes that interest rates would stay steady.
Focus now shifts to the U.S. inflation data, due at 1230 GMT and expected to show consumer prices cooled in September. Data on Wednesday showed U.S. producer prices rose more than expected last month but underlying inflation continued to abate.
“The U.S. CPI data for September has the ability to challenge the current narrative pushed by the Federal Reserve and finally accepted by markets that interest rates are due to stay higher for longer,” noted Julien Lafargue, chief market strategist at Barclays (LON:) Private Bank.
“While headline CPI will likely get a boost from higher oil prices, our attention will be on the core component which we think should remain muted.”
The 10-year Treasury yield dipped for a third straight day, while 10-year German bund yield hovered near recent lows touched on Wednesday.
Among single stocks, Danish drugmaker Novo Nordisk (CSE:) rose 2.4% to touch a fresh record high.
Ericsson (BS:) rose 1.9% in choppy trading after the Swedish telecom gear maker announced a 32 billion Swedish crown ($2.9 billion) impairment charge.
In UK, Restaurant Group surged 37.1% after an Apollo Global-owned and managed vehicle announced acquisition of the Wagamama owner for 506 million pounds ($623.4 million) in cash.
Europe’s largest sugar producer Suedzucker climbed 2.3% after it raised its forecast for full-year earnings.
Meanwhile, Barclays dropped as much as 3.8%, underperforming the wider market, with several sources attributing the fall to broad comments by the bank’s CEO about the outlook for the sector’s earnings.
CEO C.S. Venkatakrishnan told Bloomberg’s “In the City” podcast on Wednesday that stagnant deal activity, easing volatility and peaking interest rates are set to compound pressure on bank earnings.
