French, German stocks sprint to record high on earnings cheer

By Shubham Batra and Amruta Khandekar

(Reuters) -European shares rose on Thursday as upbeat corporate earnings pushed French and German stocks to a record high, while investors assessed comments by European Central Bank President Christine Lagarde on the disinflation process in the euro zone.

France's benchmark CAC 40 closed up 0.9%, near its intra-day record high, with Renault (EPA:RENA) the top gainer.

The carmaker's shares jumped 6.5% after it reported margin and revenue gains and a huge dividend increase. The move also pushed Europe's automobile index to a near two-year high.

Also boosting the CAC 40 was a near 2% gain in shares of Pernod Ricard (EPA:PERP) as the spirits maker left its longer-term growth ambitions intact.

"In Europe, there is a quality theme. You want to stick with companies that are able to continue to have pricing power, good market share and good earnings," said Karim Chedid, head of investment strategy for iShares EMEA at BlackRock (NYSE:BLK), noting luxury as one of the preferred sectors.

Germany's DAX also hit an intra-day record high, and ended up 0.6% at a record closing high.

Commerzbank (ETR:CBKG) was the top performer on the index, up 5.5% as the lender posted its biggest profit in 15 years in 2023 on a boost from higher interest rates.

The pan-European STOXX 600 closed up 0.6% at an over two-year high, with Goldman Sachs raising its 2024 target for the benchmark index to 510 points, representing about 5% upside from current levels.

Investors drew positive inferences after Lagarde told a European Parliament hearing in Brussels that recent economic data out of the euro zone indicated that inflation is heading back to the target as predicted.

The ECB has more room to cut interest rates than the Federal Reserve or the Bank of England because of lower signs of persistent inflationary pressures, Chedid added.

UK's FTSE 100 also gained 0.4% as data showed Britain's economy entered a recession in the second half of 2023, fuelling bets that the BoE would ease its monetary policy.

Among individual movers, Stellantis (NYSE:STLA) rose 5.7% after saying it would launch a share buyback programme worth 3 billion euros this year.

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Temenos shares plunged 28.2% after Hindenburg Research said it had taken a short position in the Swiss software firm. The Six Swiss exchange later suspended trading of shares on request of the company.

Shares of Tomra jumped 30.9%, while Fortnox soared 20.1% after both companies posted fourth-quarter results above expectations.