European shares dipped on Friday (Mar 15) as risk sentiment remained subdued due to mounting concerns the Federal Reserve may delay interest rate cuts, though strength in telecommunications stocks helped stem losses.

The pan-European Stoxx 600 index ended 0.2 per cent lower after touching record highs in three of the past five sessions.

The Stoxx 600 clocked its eighth consecutive week of gains, supported by an array of upbeat corporate updates and expectations of interest rate cuts from the European Central Bank.

Market participants are drawing relief from the recent slowdown in inflation in the eurozone, with some European Central Bank policymakers backing a June rate cut.

“With inflation on track to reach its target in the second half of the year, the ECB will cut its deposit rate from 4 per cent to 3 per cent by year-end and to around 2.25 per cent by the middle of 2025,” said Andrew Kenningham, chief Europe economist at Capital Economics, in a note.

Meanwhile, hotter-than-expected inflation data from the United States earlier this week has muddied the Fed’s monetary policy path.

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Jose Torres, senior economist at Interactive Brokers, said: “Investors are now thinking that rate relief may arrive in July rather than June, with expectations nearing coin-flip odds for the earlier month.”

The rate-sensitive real estate index led losses with a 2 per cent decline on Friday, and was also the worst sectoral performer for the week.

The index was also weighed down by a 10.6 per cent drop in Vonovia shares after Germany’s largest landlord reported its biggest loss ever in 2023 following further writedowns on the values of its properties.

Among others, Swisscom shares gained 4.9 per cent after the telecom company said it will buy Vodafone Italia for eight billion euros (S$11.7 billion) and merge the business with its Italian subsidiary Fastweb.

Vodafone shares jumped 5.7 per cent, pushing the broader telecommunications up 1.5 per cent.

Germany’s HelloFresh reported a decline of 6.6 per cent in the number of active customers in the fourth quarter. Still, the stock was the top gainer on the Stoxx 600, rallying 10.9 per cent.

Polish fashion group LPP shares bottomed the Stoxx 600, falling 35.8 per cent after Hindenburg Research published a report alleging the company’s sale of its Russian assets was fake.

Meanwhile, data showed consumer prices in France rose slightly more than initially expected year on year in February, while Italian European Union-harmonised consumer prices were up 0.8 per cent in February from a year earlier. REUTERS