European shares extend record rally

The pan-European STOXX 600 index gained 0.5 per cent in early trade, touching a new all-time high

European shares extended their record-breaking rally on Thursday.

The pan-European STOXX 600 index gained 0.5 per cent in early trade, touching a new all-time high after closing at a record high on Wednesday.

The rally in Europe was further underpinned by reassuring rhetoric from the European Central Bank’s annual forum in Sintra, Portugal.

ECB President Christine Lagarde signalled that the risks surrounding euro zone inflation and economic growth are becoming “more broadly balanced.” The commentary offered a welcome dovish counterweight to market anxieties that lingered after the ECB delivered a 25-basis-point rate hike last month.

The remarks have given the European Central Bank wider latitude to manage its domestic policy transition without the pressure of chasing aggressive central bank hikes.

The STOXX 600 was on course to log its best weekly performance in almost two months.

Broader market optimism was also heavily reinforced by tangible progress in Iran-U.S. peace talks.

The geopolitical breakthrough helped drag oil prices back down to pre-war levels and allowed international shipping traffic to begin normalizing, removing a significant inflationary bottleneck for European corporate supply chains.

Major indices tracked the broader optimism. On the day, Germany’s DAX gained 0.9 per cent to a record high, France’s CAC 40 added 0.3 per cent, Italy’s FTSE MIB advanced 0.5 per cent, while London’s commodity-heavy FTSE 100 rose 0.3 per cent.

Among individual stocks, Pirelli rose 2 per cent after reports of stake interest by Czech businesses.

Auto1 Group advanced 2 per cent after J.P Morgan added stock to positive catalyst watch.