European shares paused near record highs on Friday (Mar 22) with British, German and Italian stocks outperforming regional peers following a slate of dovish cues from major central banks this week.

The pan-European Stoxx 600 index ended flat but notched its ninth straight weekly gain after logging another intraday all-time high earlier in the day.

Losses in rate-sensitive technology shares and the personal and household goods index, which tracked overnight weakness in Chinese markets, were offset by gains in defensive utility and real estate shares.

Britain’s FTSE 100 rose 0.6 per cent to a one-year high of 7,930 points.

British retail sales unexpectedly held steady in February despite wet weather hitting in-store sales, adding to signs of recovery from last year’s mild recession.

“The 8,000 mark is now within reach as investor money finally heads to the undervalued UK stock market despite retail sales unexpectedly falling flat,” said Axel Rudolph, senior market analyst at online trading platform IG.

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German stocks firmed 0.2 per cent after a survey showed the country’s business morale improved in March more than expected. The Ifo institute reported its business climate index at 87.8, exceeding the 86.0 forecast by analysts in a Reuters poll.

Italy’s IBEX 35 firmed 0.7 per cent as Santander, the euro zone’s second-biggest bank by market value, said it was on track to pay shareholders more than 6 billion euros (S$8.8 billion) in dividends and buybacks in 2024.

Adding to the upbeat mood, European Central Bank head Christine Lagarde told European Union leaders gathered in Brussels the eurozone’s inflation rate is set to keep on falling, while economic growth will start picking up this year.

Citigroup raised its 2024 year-end target for the Stoxx 600 index by about 6 per cent to 540 from 510, citing more clarity on the Federal Reserve’s interest rate trajectory and potential weakness in the US dollar.

UK’s Phoenix Group topped the benchmark European index with a roughly 8 per cent jump after the insurer said it expected to turn a profit of 900 million pounds and generate higher operating cash by 2026.

Spain’s Grifols fell 6 per cent as market supervisor CNMV found no significant errors in the drugmaker’s accounts but “deficiencies in the detail and accuracy of breakdowns and explanatory notes in some years”.

JD Sports fell 6.3 per cent after Nike, the world’s largest sportswear maker, warned that its revenue in the first half of fiscal 2025 would shrink.

Dino Polska dropped 10.3 per cent to the bottom of the benchmark index after the Polish food retailer missed fourth-quarter earnings expectations. REUTERS