by Diana Mandia

(Reuters) – European stocks ended higher on Thursday, buoyed by interest-rate-sensitive property and technology stocks, as well as retail, led by the results of Sweden’s H&M, as markets digest mixed data on inflation.

In Paris, the CAC 40 ended up 1.06% at 7,263.37 points. The British Footsie gained 0.74% and the German Dax 1.26%.

The EuroStoxx 50 index advanced by 1.28%, the FTSEurofirst 300 by 0.93% and the Stoxx 600 by 1.03%.

As fears over the banking sector ease, investors are once again focusing their attention on indicators that could give indications of central banks’ plans for interest rates, including inflation.

Although prices are falling across the Eurozone, core inflation, which excludes food and energy volatility, remains elevated.

In Spain, inflation slowed more sharply than expected in March to fall back to its lowest level since August 2021, at 3.3% year on year, due in particular to the drop in electricity and fuel prices, but so-called core inflation remained robust at 7.5%.

In Germany, prices fell in March but they still remain above forecasts with a 7.8% increase over one year, against a 7.5% increase expected by analysts.

According to Craig Inches, head of rates at Royal London Asset Management, the pressures that had made central banks reluctant to suspend rate hikes, such as high inflation, are still present.

In the United States, the Commerce Department revised the so-called “core PCE” basic price index for the fourth quarter of 2022 upwards, to 4.4% on an annual basis, against a previous estimate of 4.3%.

Preliminary inflation figures for the euro zone as a whole and for France in March are due out on Friday.

VALUES

The real estate (+3.74%) and new technologies (+2.54%) compartments, sensitive to rates, are among the strongest increases of the session on the Stoxx 600, with in particular Castellum, Vonovia and Unibail -Rodamco, which gained between 4.4% and 6.1%.

Distribution (+3.79%) was driven in particular by H&M (+16.3%), the Swedish clothing giant having reported Thursday a surprise operating profit over the December-February period.

Philips jumped 5.8% on hopes of a deal this year on its breathing devices which were subject to a massive recall.

AT WALL STREET

At the time of the close in Europe, the Dow Jones gained 0.16%, the Standard & Poor’s 500 0.47% and the Nasdaq 0.68%.

CHANGES

Risk appetite is weighing on the dollar, which fell 0.44% against a basket of benchmark currencies, while the euro took advantage of this to rise 0.49% to 1.0901 dollars.

RATE

Eurozone government bond yields rose on Thursday along with the inflation data.

In Europe, yields on the more rate-sensitive two-year German Bund soared on the release of German inflation figures to end up 12 basis points to 2.742% while the German ten-year advanced by more than six basis points to appear at 2.362%.

Yields on two-year US Treasury bonds gained almost three basis points to 4.11%.

THE INDICATORS OF THE DAY

In addition to the inflation data, investors took note of jobless claims over the past week in the United States. These remained weak despite a stronger than expected rise, which suggests that the tightening of credit conditions has not yet had a significant impact on the strength of the labor market.

OIL

Oil prices rose on Thursday, supported by fears over supplies in Iraq and the unexpected drop in crude inventories in the United States last week, which fell to a two-year low.

Brent rose 1.09% to 79.11 dollars a barrel and US light crude (West Texas Intermediate, WTI) 1.55% to 74.12 dollars.

TO BE FOLLOWED ON FRIDAY:

ECB President Christine Lagarde is due to deliver a speech at a conference organized by the Osservatorio Permanente Giovani-Editori in Florence.

(Edited by Blandine Hénault)

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