European shares hit two-month high

The pan-European STOXX 600 ended up 0.3 per cent, with real estate stocks leading gains and rising 1.5 per cent

European shares reached a two-month high on Wednesday, driven by rate-sensitive real estate stocks, while British software company Sage climbed to a record high after reporting strong annual operating profit and announcing a share buyback plan.

The pan-European STOXX 600 ended up 0.3 per cent, with real estate stocks leading gains and rising 1.5 per cent.

In the meantime, a gauge of euro zone equity market volatility reached its lowest level since July.

Euro zone bonds were little changed after central bank officials did little to reduce investor expectations that the next move in interest rates would be lower.

Minutes from the U.S. Fed's last policy meeting showed officials agreed to proceed "carefully" and only hike rates if inflation rises again, while ECB President Christine Lagarde said battle has not yet been won and speculations based on short-term data flow were premature.

Markets are close to being fairly valued and there is no huge positive catalyst, but yet investors are still waiting, thinking things are going to get better sometime soon, and that is what they have been saying for a year, said Michael Field, Europe market strategist at Morningstar.

In the UK, finance minister Jeremy Hunt announced tax cuts for workers before an expected 2024 election and gave businesses investment incentives in an effort to boost the economy.

The commodity-heavy FTSE 100 slid 0.2 per cent, lagging other regional markets, with heavyweight energy stocks tracking weak crude prices as an OPEC+ meeting was delayed.

Sage added 13.3 per cent to top the STOXX 600 after reporting an 18 per cent increase in full-year underlying operating profit and said margins would continue to rise this year. The firm also announced a £350 million share buyback programme.

Thyssenkrupp jumped 6.6 per cent after the German group reported full-year results with "strong" free cash flow.

German fashion house Hugo Boss added 3.0 per cent after Deutsche Bank and BoA Global Research upgraded their ratings.

Adevinta added 4.8 per cent after a Permira and Blackstone led consortium offered to buy the online classifieds group for around 141 billion Norwegian crowns ($13.1 billion).