European markets closed higher, except for Britain, on Friday, led by a slight rise in technology and luxury goods stocks.
The pan-European Stoxx 600 index ended the session up 0.19%, with most regional bourses and most sectors rising. The index also posted gains for the second week in a row.
The German DAX index closed up by about 0.38%, the French CAC 40 index gained by about 0.39%, while the British FTSE 100 index fell by about 0.32%.
Technology stocks led the gains, rising 1.98%, while mining stocks added 1.56%. Luxury goods stocks also rose on Friday, with Gucci owner Kering up 3.35%, after rising more than 5% earlier in the session.
The Stoxx 600 index ended Thursday's trading session in the green after the European Central Bank announced its third interest rate cut this year. The central bank on Thursday cut its deposit rate by another 25 basis points, as inflation risks in the European Union recede faster than expected.
Gradual interest rate cut
The European Central Bank and the U.S. Federal Reserve are likely to cut interest rates at a relatively similar pace, as their respective rate-cutting cycles are underway, Pimco portfolio manager Konstantin Veit told CNBC on Friday.
There are good arguments for the ECB to cut rates faster than the Fed, but also for the ECB to cut rates more slowly than the U.S. central bank, Vit said. However, he believes the pace of rate cuts will be more or less synchronized between the two central banks.
The European Central Bank cut its key interest rate by 25 basis points on Thursday for the third time this year. In the United States, the Federal Reserve has cut rates only once this year, but by 50 basis points. There are still one ECB meeting and two Fed meetings scheduled before the end of the year.
Luxury stocks rise as investors ponder China outlook
Luxury goods stocks in Europe rose on Friday as investors looked at the outlook for the Chinese economy and markets in the region.
Shares in Kering, owner of Gucci, rose 5.07%, while Burberry rose 4.45% and LVMH rose 3.1%. Other luxury brands, including Hugo Boss and Christian Dior, also gained ground.
“China’s latest announcements to support the economy as well as financial markets are giving a boost to luxury stocks today, on the grounds that this very poor earnings season could mark an initial bottom for a sector where downturns are usually sharp but short-lived,” Swetha Ramachandran, global equity fund manager at Artemis Fund Managers, told CNBC on Friday.
Luxury stocks were reacting to news from China's main market, where Beijing aims to boost its economy.
Data from China on Friday showed the country’s third-quarter gross domestic product grew 4.6% year-on-year, slightly higher than expected. Retail sales data for September also beat estimates, rising 3.2% year-on-year.
Meanwhile, China's central bank has signaled further easing of monetary policy, with central bank governor Pan Gongsheng saying commercial banks' reserve requirement ratios could be lowered further by the end of the year.
The moves in luxury stocks appear to be a rebound from better China data, Emmanuel Cao, head of European equity strategy at Barclays, said on Friday.
