European shares close at record high; Delivery Hero soars

By Ankika Biswas and Johann M Cherian

(Reuters) - European shares closed at a record high on Tuesday, with German's Delivery Hero notching its biggest jump on record on the sale of its Taiwan foodpanda business, while the outlook around interest rates also remained on the cards.

The pan-European STOXX 600 inched up 0.18%, with the automobiles sector leading sectoral gains with a 1.4% rise.

Delivery Hero soared 26.3%, after Uber announced a $1.25 billion deal to take over its foodpanda business in Taiwan and buy new shares in the German firm. Earlier in the session, the main index briefly spiked downwards following a stronger-than-expected U.S. producers inflation report.

After strong gains last week, investors are at bay for two days now as they wait for any hints on when the first rate cut out of the U.S. could come. While the European Central Bank has hinted at staying independent of the U.S. Federal Reserve on rate reductions, the outlook remains uncertain beyond June. Belgian central bank chief Pierre Wunsch told German newspaper Handelsblatt that while ECB's first two interest rate cuts are a "no brainer", slower than expected policy easing in the U.S. could delay some of the European regulator's moves.

"The really big difference between the U.S. and Europe has been the relative resilience of the U.S. economy and especially household spending," said Jennifer McKeown, chief global economist at Capital Economices.

"This explains why interest rate cuts are likely to start a little later (in the U.S.), most likely in September."

Meanwhile, Swiss eye-care group Alcon advanced 7.5% to an all-time high after first-quarter earnings, while hearing aid maker Sonova Holding climbed 6.7% after forecasting accelerating growth for 2024.

Banking stocks rose over 1%, with Societe Generale gaining 3.7% after French President Emmanuel Macron said in a TV interview that the European banking sector needs greater consolidation, even if that means a major French bank being bought by a European rival. On the other hand, Rheinmetall shed 2.7% after the German arms manufacturer missed expectations for first-quarter sales and profit, and was among the biggest losers on German's DAX, which was down 0.1% and underperforming among regional peers.

Bottoming the STOXX, chemicals distributor Brenntag dropped 8.2% after lowering its full-year earnings forecast. The travel and leisure sector was the worst hit, with Flutter dropping nearly 2% after the world's largest online betting company maintained its full-year outlook. Among others, automobile giant Volkswagen advanced 2.6%. A report showed the German automaker is exploring the sale of as much as $1.08 billion worth of stock in its heavy truck-making arm Traton SE.

(Reporting by Ankika Biswas and Johann M Cherian in Bengaluru; Editing by Eileen Soreng, Sherry Jacob-Phillips and Nick Zieminski)