Europe: German shares hit fresh record high, outpace Europe’s Stoxx 600

GERMAN shares hit a fresh record high on Tuesday, supported by gains in industrial stocks and insurers, while data showed a services sector downturn in the euro zone’s largest economy eased in November.

Germany’s DAX climbed 0.8 per cent, propelled by strong gains in Allianz and Daimler Truck Holding, while the Stoxx 600 index closed 0.4 per cent higher.

The German index is up nearly 18.7 per cent so far this year, outperforming the 10 per cent gains on the pan-European Stoxx 600 index.

Business activity in Germany and the overall euro zone declined in November, although at a slower rate than in the previous month, surveys showed.

Meanwhile, European Central Bank conservative Isabel Schnabel noted further interest hikes are “rather unlikely”, after an unexpectedly big fall in inflation, steering bond yields sharply lower.

Rate-sensitive real estate stocks led sectoral gains in Europe, up 1.8 per cent.

China-exposed HSBC and Prudential slipped following Moody’s outlook cut on China’s credit ratings.

“With Moody’s switching China to a negative outlook, the expectation is that the slowing economic growth is going to have a knock-on effect for big international companies,” said Danni Hewson, head of financial analysis at AJ Bell.

Miners were the top sectoral decliners, losing -0.9 per cent as metal prices weakened on worries over demand from top consumer China.

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The healthcare sector eased 0.3%, with Carl Zeiss Meditec sliding 1.7 per cent after JPMorgan started the German medical technology firm with an “underweight” rating.

Barclays fell 2.5 per cent after one of its largest shareholders Qatar Holding moved to sell around £510 million (S$863.5 million) of its stock.

Ericsson jumped 6.1 per cent after AT&T chose the Swedish telecoms equipment maker over Finnish rival Nokia to build a telecom network, sending the latter’s shares down 5.9 per cent to the bottom of the Stoxx 600.

British eateries operator SSP Group gained 6.4 per cent following its annual dividend plans and an upbeat outlook.

Italy’s blue-chip index breached the 30,0000-point mark for the first time since 2008. Pirelli gained 4.9 per cent to top the index after UBS upgraded the Italian tyre maker to “buy” from “neutral”.

In economic data, the ECB’s October consumer expectations survey showed inflation expectations among euro zone consumers held steady last month while the outlook for economic growth worsened.

Euro zone producer prices inched higher as expected in October compared with September, while the decline from a year earlier eased. REUTERS