(Reuters) - A rally in luxury stocks led by Gucci-owner Kering and optimism over fewer new coronavirus cases in China pushed an index of European shares and the German benchmark to new highs on Wednesday.
Kering (PRTP.PA) jumped 6.3% after reporting better than expected quarterly results. The company remained upbeat about its longer-term prospects, despite saying it is halting spending in China on virus fears.
Stronger iron ore and base metal prices lifted China-sensitive commodity .SXPP and auto stocks .SXAP after the country reported its lowest number of new coronavirus cases in two weeks, bolstering a forecast by Beijing’s senior medical adviser for the outbreak to end by April.
In their second consecutive session of record highs, the pan-European STOXX 600 index closed up 0.6% at 431.16, while Frankfurt's DAX .GDAXI finished 0.9% higher. Investors seemed to look past data that showed the bloc's industrial production fell more then expected in December.
“It seems risk appetite is here to stay,” said Edward Moya, senior market analyst at OANDA New York.
“Expectations are growing that ... China will be able to fulfil their goal of doubling GDP and incomes in the decade to 2020,” he said, referring to comments made by a top Chinese think tank.
But investors still remained watchful of further international spread of the virus and its net economic impact. Analysts and bankers say opaque Chinese data and lack of precedent hinder clear estimates.
Rating agency S&P Global warned that the likely subsequent slowdown in China’s economy could shave 0.1 to 0.2 percentage points off both euro zone and UK growth this year.
Miner Rio Tinto (RIO.L) cited efforts taken to contain the virus’s spread as the reason for a slowing in copper concentrate shipments to China.
Languishing at the bottom was Dutch bank ABN Amro (ABNd.AS) after clocking a weaker-than-expected fourth-quarter net income.
Reporting by Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and Nick Macfie