European shares close near three-week high

The pan-European Stoxx 600 closed 0.42 per cent higher at 557.16 points, led by a 1.9 per cent increase in the luxury index

European shares closed near a three-week peak on Monday, with luxury stocks boosting the main index.

The pan-European Stoxx 600 closed 0.42 per cent higher at 557.16 points, led by a 1.9 per cent increase in the region’s luxury index.

Marquee fashion names LVMH, L’Oreal climbed 2.7 per cent and 1.9 per cent respectively, while Kering gained 5.8 per cent. Brunello Cucinelli added 5.6 per cent after JPMorgan initiated coverage with an “overweight” rating.

French luxury stocks have come into the spotlight following the death of designer Giorgio Armani, who included directions on the possible sale of his fashion house in his will, giving priority to LVMH, L’Oreal and eye wear leader EssilorLuxottica.

This is one of the world’s most valuable private luxury brands, and if it were to go public in any way, then that would be extremely encouraging for the sector as a whole, Fiona Cincotta, senior market analyst at City Index, said.

European chip stocks also boosted the main index, with BESI, ASML and ASMI rising between 5.6 per cent and 6 per cent.

Several central banks will announce their policy decisions this week, including those in Japan, Canada and Britain.

Fitch’s rating downgrade of France’s sovereign credit late on Friday did not seem to hurt the benchmark CAC 40 index, which rose 0.9 per cent to a three-week high, while domestic bonds held steady.

The CAC 40 is not really even blinking to a Fitch rate decision, according to Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Ozkardeskaya said that the reason for that is that the optimism (about U.S. interest rate cuts) is impacting financial markets right now, including French stocks.