Europe close: Stocks stronger ahead of big central bank decisions

European markets managed to stay above the waterline by the close on Friday, as investors digested US inflation data, and looked towards interest rate decisions from the US and UK next week.

The pan-European Stoxx 600 was up 0.8% at 438.97, as Germany’s DAX added 0.74% to 14,370.72.

France’s CAC 40 gained 0.46% to 6,677.64, while London’s FTSE 100 eked out a rise of 0.06% to 7,476.63.

“European markets have spent most of this week slightly on the back foot, perhaps not surprising given the gains we’ve seen over the past few weeks, as an element of caution kicks in ahead of what is likely to be a big week for markets next week”, said CMC Markets chief market analyst Michael Hewson.

“With the Federal Reserve, ECB and Bank of England all set to raise rates by 50-basis points, attention is now shifting to what comes next against a backdrop of slowing growth, and doubts about the sticky nature of inflation, as yields edged back higher after US PPI came in higher than expected for November.”

Fresh data out of the US towards the end of the day showed producer prices rising slightly faster than expected in November.

The producer price index grew 0.3% on the month, faster than the 0.2% pencilled in by analysts, and in line with the revised figure from October.

On the year, prices raced ahead 7.4%, slowing from the revised 8.1% figure a month earlier, but still above the 7.2% anticipated by market watchers.

Looking ahead, the US Federal Reserve was expected to hike rates by 50-basis points next week, down from its previous 75-point increases.

Shares in Asia-Pacific were higher overnight, with Hong Kong’s Hang Seng index leading gains as Chinese inflation data for November came in broadly as expected.

Premier of the People’s Republic, Li Keqiang, also said the country’s easing of strict Covid-19 policy would allow its economy to gather momentum.

In equities, British investment manager Man Group gained 5.34% after announcing a $125m share buyback program.

Credit Suisse was ahead 6.76% after the embattled bank hailed a "milestone" in its turnaround plan on Thursday, raising CHF 2.24bn as part of a CHF 4bn cash call.

On the downside, Carl Zeiss Meditec fell 3.18% after the German medical technology company issued a weak first-quarter profit outlook.

Reporting by Josh White for Sharecast.com. Additional reporting by Frank Prenesti.