(Bloomberg) -- Signs of cooling inflation and a rally in luxury shares boosted European stocks on Friday, helping them trim a quarterly decline.
Luxury stocks were among the top performers after Bank of America Corp. strategists raised their view on the sector to overweight, while technology stocks followed US peers higher and real estate rebounded from six days of losses. The Stoxx Europe 600 Index was 0.4% higher by the close. Energy and insurance stocks underperformed.
Friday’s gains were supported by upbeat inflation data, which showed consumer prices in France increased by 5.6% from a year earlier in September — down from the previous month’s 5.7% advance. In the UK, new figures showed that the economy is stronger than previously thought.
The retail sector got a boost from Nike Inc. results, which showed a drop in its stockpile of inventory — a sign the sportswear giant is making progress in moving out older merchandise for newer, more-profitable items. Adidas AG and Puma SE were among the top risers in the region.
Commerzbank AG soared after the German lender said it intends to return €3 billion ($3.2 billion) to shareholders for the three financial years through 2024, while Aston Martin Lagonda Global Holdings Plc advanced as the carmaker said Executive Chairman Lawrence Stroll’s Yew Tree Consortium agreed to boost its stake to 26.2%.
The main regional benchmark notched its first quarterly drop since September 2022 as sentiment has soured due to fears about the impact of higher-for-longer interest rates on economic growth, as well as concerns over the property crisis in China. The Stoxx 600 Index is now about 6% higher this year.
The short-term outlook remains negative, and some 63% of European-based investors predicted downside for the market in the coming months, according to a recent BofA fund manager survey. However, seasonality shows that regional equities perform best over the last three months of the year.
“We expect a complicated fourth quarter as the economy is slowing, while energy costs are a headwind and spending is getting weaker,” said Ricardo Gil, head of asset allocation at Trea Asset Management. “It will be a quarter with lots of noise and central banks again as the main focus.”
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--With assistance from Michael Msika and Sagarika Jaisinghani.
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