European stocks head for second weekly gain

European shares rose on Friday and were hovering near a nine-month high, supported by healthcare and banking stocks and upbeat economic data from the UK.

The pan-regional STOXX 600 gained 0.6% by 0918 GMT, with investors looking ahead to earnings from big US banks.

UK’s FTSE 100 added 0.6% after data showed the British economy eked out 0.1% growth in November, helped by a boost from World Cup drinkers and video game sales, reducing the chance that it has already slipped into recession.

In Germany, data showed the economy likely stagnated in the final quarter of last year and grew by 1.9% over the full-year 2022, suggesting Europe’s largest economy may just escape a recession over the winter.

European shares were headed towards a second straight weekly gain, in an upbeat start to January and the new year, after data signalled a slowdown in inflation in the euro zone and the United States, which could allow central banks to slow the pace of their monetary policy tightening.

“It is a direct consequence of the slightly more bullish outlook that markets are taking with respect to the overall wider economic outlook,” said Michael Hewson, chief market analyst at CMC Markets UK.

European shares rise as investors await US inflation data

“At the moment, it is a rising tide that lifts all boats.” Rate-sensitive tech and retail stocks have led gains so far this year, up 14% and 15%, respectively, after a rough 2022 when fears of an economic slowdown and rising interest rates hammered these sectors.

On Friday, healthcare stocks provided the biggest boost to the index, with Novo Nordisk A/S and Roche Holding AG gaining nearly 1.5% in early trading. Banking stocks gained 1.1%, with investors nervous ahead of fourth-quarter earnings from US big banks later in the day.

Enel edged up 0.7% after its CEO was quoted as saying the Italian power utility company could secure up to 5 billion euros ($5.4 billion) for investment from REPower EU energy funds in addition to 3.5 billion euros in EU recovery funds already won. Shares of online gaming company Kindred Group dropped 16.8% on profit warning for the fourth quarter.