European shares hit two-year high on LVMH, Remy Cointreau results

LVMH jumped 9.8% after the world's largest luxury group posted a 10% rise in fourth-quarter sales, driven by resilient demand, including from Chinese buyers. The stock helped the personal and household goods index add 3.8% and lead sectoral advances.

European equities gained on Friday, boosted by upbeat quarterly updates from luxury group LVMH and spirits maker Remy Cointreau, while investors assessed prospects for an interest rate cut this year after the European Central Bank left rates unchanged.

By 0951 GMT, the pan-European STOXX 600 index was up 0.9%, hitting its highest level in two years. LVMH jumped 9.8% after the world's largest luxury group posted a 10% rise in fourth-quarter sales, driven by resilient demand, including from Chinese buyers.

The stock helped the personal and household goods index add 3.8% and lead sectoral advances. A gauge of the top ten European luxury stocks gained 3.8%, tracking its best day since November 2022.

"The shares are up in relief because there's been so much negative commentary ... referring to a bit of a slowdown," said Russ Mould, investment director at AJ Bell. "One of the core (components) of luxury goods stocks is the plutocratic customer base, that will be relatively insensitive to what goes on in the wider economy."

Remy Cointreau was also among the top performers, up 13.1% after the French spirits maker posted a slightly smaller-than-expected decline in third-quarter sales. France's CAC 40 index, which includes both stocks, rallied to gain 1.9% and outperformed other regional bourses.

Heavyweight healthcare stocks added 1.5%, lifted by a 13.6% rise in Lonza after the Swiss contract drug manufacturer reported sales and core earnings beat for 2023. Aiding sentiment, the ECB held interest rates at 4% on Thursday and reaffirmed its commitment to fighting inflation even as the time to start easing borrowing costs approaches.

Taking the cues from the central bank's growing confidence about the inflation outlook, traders are now pricing in nearly 140 basis points cut this year, up from around 130 bps a day earlier. A slew of strong earnings reports this week from European firms and a slight dovish tilt in ECB's commentary have set the benchmark index on course for weekly gains, eyeing its best week in over two months.

Markets now await the release of the personal consumption expenditures (PCE) price index in the United States, to ascertain the Federal Reserve's interest rate path, which could set the tone for global central banks. Among the day's underperformers, Germany's DAX 40 index was nearly flat, with data showing German consumer sentiment is set to tumble in February as households continue to brace for uncertainty.

Technology stocks shed 1.4%, in ASML Holding , after the semiconductor equipment maker's shares hit a fresh record high in the previous session.