European Stocks Close Higher As China Reopening Aids Sentiment

European stocks closed higher on Friday, lifted by optimism about Chinese economic growth, cooling inflation and prospects of the Federal Reserve and other major central banks slowing the pace of their interest rate hikes in the coming months.

Recent hawkish comments from some Fed officials limited markets' upside.

The pan European Stoxx 600 gained 0.37%. The U.K.'s FTSE 100 climbed 0.3%, Germany's DAX gained 0.76% and France's CAC surged 0.63%, while Switzerland's SMI ended 0.32% up.

Among other markets in Europe, Austria, Belgium, Czech Republic, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Portugal, Spain, Sweden and Turkiye closed higher.

Poland edged up marginally, while Iceland and Russia ended weak.

In the UK market, 3I Group climbed 3.3%. Frasers Group, SSE, JD Sports Fashion, Airtel Africa, Flutter Entertainment, Burberry Group, Rightmove, Glencore and Whitbread gained 2 to 3%.

Hargreaves Lansdown ended 2.6% down. Pearson, AstraZeneca, Melrose Industries and Segro lost 1 to 2.2%.

In Paris, Essilor, Thales, Safran, Carrefour, Airbus, BNP Paribas, Societe Generale, ArcelorMittal, Vivendi, Alstom, Vinci, AXA and Bouygues gained 1 to 2%.

Michelin drifted down by about 1.7%, and Dassault Systemes ended lower by 1.6%. Sanofi and Eurofins Scientific posted moderate losses.

In the German market, Zalando rallied nearly 4.5%. Covestro, MTU Aero Engines, Fresenius Medical Care, Deutsche Bank, RWE, Allianz, Deutsche Post, Munich RE, Adidas, Bayer and Fresenius gained 1 to 2.3%.

Continental, Porsche, Merck and Deutsche Boerse ended notably lower.

Ericsson shares tumbled nearly 5% in Sweden after the telecom major reported weak profit in its fourth quarter, hurt by hefty charges.

In economic releases, German producer price inflation eased for the third straight month in December to reach its lowest level in just over a year amid a moderation in energy prices, data from Destatis showed.

The producer price index climbed 21.6% year-over-year in December, which was slower than the 28.2% surge in October. Economists had forecast the price growth to ease to 20.8%.

Further, the latest inflation rate was the weakest since October 2021, when prices had risen 19.2%.

Separate data showed that U.K. retail sales unexpectedly declined in December despite the festive season.

The retail sales volume logged a monthly fall of 1% after easing by a revised 0.5% a month ago, data published by the Office for National Statistics revealed Friday.

This was in contrast to economists' forecast for a 0.5% increase and marked the second consecutive contraction.

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