by Diana Mandia

(Reuters) – European stocks ended higher on Thursday as major indices rallied in a volatile session marked by still very high inflation in the eurozone and strong labor market data in the United States .

In Paris, the CAC 40 ended up 0.69% at 7,284.22 points. The British Footsie gained 0.37% and the German Dax 0.15%.

The EuroStoxx 50 index ended up 0.53%, the FTSEurofirst 300 0.55% and the Stoxx 600 0.5%.

After starting the session down, the indices rallied with the calm in European rates and despite the uncertainty regarding monetary policy.

Eurostat showed on Thursday that excluding energy and unprocessed food, the most volatile elements, price increases fell in February from 7.1% to 7.4%, which argues that the Bank European Central Bank (ECB) continues to raise its interest rates.

Given the tenacity of inflation, markets increasingly expect the ECB, already committed to raising rates by half a point in two weeks, to take them to higher levels thereafter.

The president of the institution, Christine Lagarde, questioned Thursday by the Spanish television channel Antena 3, said that additional hikes are “possible” after March, according to incoming data.

The minutes of the ECB meeting held in early February and published on Thursday also hint that Frankfurt may well continue to raise rates beyond this month.

Investors will watch Friday the publication of the French industrial production index and German foreign trade figures in January.

VALUES

On the stock market, the chipmaker STMicroelectronics dropped 3.2%, the red lantern of the CAC 40, and its rival Infineon -0.47%, after Tesla said it had found a way to use significantly less silicon carbide thanks to to internal technology.

Showing the strongest increases in the SBF 120 index in Paris, Vallourec climbed 6.1% and Technip Energies 7% after their results.

AT WALL STREET

At the close in Europe, the Dow Jones rose 0.26%, while the Standard & Poor’s 500 fell 0.29% and the Nasdaq 0.63%.

Tesla, which did not unveil an affordable electric vehicle during its Investor Day on Wednesday, is dropping nearly 7%.

CHANGES

On the foreign exchange market, the euro fell 0.67% to 1.0596 dollars, with inflation in the eurozone and the prospect of a more aggressive approach by central banks supporting the rise in the dollar and bond yields.

The “dollar index”, which measures the variations of the greenback against a basket of currencies, rose 0.48%.

RATE

The yield on ten-year U.S. Treasuries continued its rally on Thursday, gaining eight basis points to 4.081%, after U.S. jobless claims figures showed the labor market remained strong. The two-year yield, for its part, rose to 4.916%.

“The upside has continued unabated and each additional piece of data only adds to the momentum,” said Matthew Miskin, co-head of investment strategy at John Hancock Investment Management.

In the eurozone, the ten-year German was trading slightly lower at 2.750% at the close.

OIL

Oil prices rose on Thursday, while paring their gains as signs of a strong economic recovery in China, the top crude importer, were offset by fears about the impact of a possible rate hike.

Brent LCOc1 advanced 0.62% to 84.83 dollars a barrel and US light crude (West Texas Intermediate, WTI) CLc1 0.82% to 78.33 dollars.

(Editing by Kate Entringer)

Copyright © 2023 Thomson Reuters