European shares slip as energy, financials weigh ahead of year-end

PARIS: European shares inched lower on Thursday as weakness in banking stocks and oil majors weighed, though the markets looked set for a strong finish to the year on expectations central banks could cut borrowing costs next year.

The pan-European STOXX 600 slipped 0.1%.

Heavyweight energy stocks eased 0.6%, tracking lower crude oil prices, while banks shed 0.5%.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Denmark’s Maersk scheduling the resumption of tankers’ passages via the Suez Canal and the Red Sea had helped to dispel immediate crude supply concerns.

Shares of the shipping company extended losses by 1.7% after falling nearly 5% in the previous session.

Geopolitical tensions remained elevated as Middle Eastern leaders have warned the conflict could widen, and Israel’s border with Lebanon is worrisome, following attacks by Hezbollah, Streeter added.

US allies including Italy and Spain have been reluctant to be associated with President Joe Biden’s Red Sea task force, reflecting fissures created by the war in Gaza.

Curbing losses, the healthcare sector briefly hit a 10-week high, closing 0.6% up as Novo Nordisk added 0.9% after declining for the previous two sessions.

The European benchmark index is approaching a 13% advance this year with technology and retail among the best performing sectors.

Global markets have rallied since mid-December when the US Federal Reserve hinted at rate cuts next year. However, the European Central Bank (ECB) has a different outlook.

ECB Governing Council member Robert Holzmann said it is too early to talk about lowering borrowing costs and such a move in 2024 is anything but certain, Bloomberg News reported.

Volumes are expected to be light with only a few trading days left in the calendar year.

Among individual stocks, Vestas Wind Systems extended gains to a sixth straight session, rising 2.4% after the Danish wind turbine-maker said it received a 1,089 MW order in the United States.

On economic data front, Spanish retail sales rose 5.2% in November from a year earlier after rising by a revised 5.3% in October.