Europe close: Stoxx 600 hits another record as data lifts sentiment

European stocks rose strongly on Tuesday as data confirmed that German inflation had fallen to its lowest in nearly three years and that wage growth in the UK had eased.

The Stoxx 600 was up 1% by the close at 506.52, setting another record high and extending the 2024 rally to 5.9%.

Strong performances were seen across the continent, with the FTSE 100, DAX and FTSE MIB all registering gains of more than 1%.

Data released in the morning session from Destatis showed that the headline harmonised index of consumer prices in Germany fell to a year-on-year rate of 2.5% last month, down from 2.9% in January and 3.7% in December.

This was in line with the initial reading released two weeks ago, and matching the consensus forecast, confirming the lowest rate of inflation since June 2021.

Over in the UK, ONS data showed that wage growth had slowed to 5.6% in the three months to January, from 5.8% previously, making the lowest rate of earnings growth since October 2022. Meanwhile, the jobless rate rose to 3.9% from 3.8%.

"Recent improvements in the UK economic outlook had seen traders pushing out rate-cut projections to August. However, in light of today’s data, these projections look vulnerable to a shift forward, particularly if we see any softening in upcoming inflation data," said Manoj Ladwa, director at ARJ Capital.

"With GBP coming off and the prospect of UK rate cuts in the coming months, FTSE has seen a wave of demand today and looks likely to remain supported near-term while this narrative holds."

In other news, oil prices held steady, with Brent rising jut 0.2% to $82.41 a barrel after OPEC kept its forecast for oil demand for 2024 and 2025, citing "robust" economic growth that has carried over from 2023. OPEC still expects demand to rise by 2.2m barrels of oil per day in 2024, and by 1.8m bpd in 2025, unchanged from its earlier projection in February.

Market movers

Shares in Porsche rallied from the red even though the German luxury carmaker said it expected lower profitability this year as it focused on launching four new models. The stock finished up more than 4%.

UK housebuilder Persimmon fell 3.7% as it warned of tough trading conditions and posted a 52% slump in profits. Also lower in London was Domino's Pizza Group, the UK-based master franchise of the global takeaway chain, after the company revealed a sharp slowdown in the fourth quarter.

Also on the FTSE, Ladbrokes owner Entain was rising strongly after reportedly hiring bankers to prepare for a sale of PartyPoker as it seeks to fend off activist investors by reinvigorating its core operations.

German chemicals maker Wacker Chemie rose 5.7% despite warning it expected a slight dip in sales for 2024, though guidance was largely better than feared.