Europe close: Stocks broadly higher as oil prices drop

European stocks mostly advanced on Wednesday as another drop in oil prices helped sentiment – though London's FTSE 100 was the only major index not to register gains.

The pan-European Stoxx 600 Index finished the day up 0.3% at 444, having risen six out of the past eight trading sessions since hitting a ten-month low of 430 on 27 October. The index has risen by a total of 3.4% since then.

Markets across the continent were making gains of between 0.2% and 0.7%, while London stocks finished down 0.1%.

Chief market analyst at IG, Chris Beauchamp, said today's session was underpinned by another drop in oil prices and lower inflation expectations. Brent was down 1.3% at $80.54 a barrel by the close, continuing its descent from the $90 mark it reached at the end of October.

“After a slow start to the week, things have picked up for stocks. European markets have made solid gains while on Wall Street things are more muted," Beauchamp said.

"But overall the outlook in the short-term continues to look good for stock markets. Oil is down sharply from its highs and inflation expectations have come down too. Investors no longer seem to fear that more rate hikes are on their way, though they do seem to be getting a little ahead of themselves in anticipating multiple rate cuts in 2024.”

In economic news on Wednesday, retail sales in the Eurozone fell by 0.3% in September, declining for the third straight month, according to data released by Eurostat. The decline was slightly worse than the 0.2% fall expected by analysts, though data for August was upwardly revised to -0.7% from the initial estimate of -1.2%.

Meanwhile, German inflation dropped to its lowest level in over two years last month as energy prices sank and food inflation slowed. The annual rate of consumer price increases eased to 3.8% in October, according to Destatis, matching the initial estimate previously published and its lowest rate since August 2021. This was a substantial slowdown from 4.5% the month before, and in line with economists' forecasts.

London bucks the trend

The FTSE 100 finished slightly lower, underperforming the rest of Europe's major indices, as heavy falls in the mining, financial and utility sectors offset strong gains in retail. Hargreaves Lansdown, National Grid, and Anglo American were among the heavy fallers – with the latter weighed down by the news of disappointing diamond sales from its De Beers division.

Marks & Spencer was the standout performer of the session on London's top-tier index, rising 9% after restoring its dividend and reporting a 56% surge in first-half profits. UK-listed sector peers Next, AB Foods and B&M were also rising after the results.

Sanofi was one of the biggest risers in Paris as the pharmaceutical giant attempts to bounce back from its share-price plunge in late-October. Despite finishing the day up 2.2%, shares are still down 15% over the past two weeks after a cut to its profit guidance disappointed investors.

Luxury groups LVMG, Kering and Hermes were also putting in decent gains on France's CAC 40, helped by positive readacross from American peer Ralph Lauren which surged on Wall Street after beating forecasts with its second-quarter profits.

Oil stocks across the continent fell as the price of crude declined, with TotalEnergies, BP, Shell and Eni finishing firmly lower.