France's blue-chip index powers gains in European shares

By Shreyashi Sanyal and Amruta Khandekar

(Reuters) - European shares ended higher on Wednesday, as gains in luxury firms pushed France's blue-chip index close to its record high level, offseting concerns that strong U.S. data would pave the way for further monetary tightening by the Federal Reserve.

The pan-European STOXX 600 index closed 0.4% higher, with a 1.5% jump in Paris-listed luxury firm LVMH among the biggest boosts.

The French group's top label Louis Vuitton said on Tuesday it has hired Pharrell Williams to head artistic direction of its menswear designs, with analysts optimistic about the decision.

France's CAC 40 index rose 1.2% to 7,300.86, coming within a whisker of its all-time high of 7,384.86 hit in January last year.

Europe's largest food retailer Carrefour jumped 8.5% to the top of the blue-chip index on a higher than expected share buyback plan.

Also boosting the CAC was a 3.0% rise in shares of Gucci owner Kering, with investor focus on the impact from China's reopening overshadowing a slump in quarterly revenue.

"I think Chinese economic growth is likely to rebound quite strongly. With the reopening, the biggest impact would be on the consumption side (like) luxury goods, transportation companies, airlines," said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.

Industrials were a big boost to the STOXX 600 on Wednesday, boosted by gains in planemaker Airbus and German engineering firm Siemens.

Meanwhile, a strong rebound in U.S. retail sales in January, coming on the heels of mixed inflation data from the country, exacerbated fears that the Fed was not close to ending its interest rate hikes which hammered equities last year.

"The economy, particularly in the U.S., is still quite strong. Inflation is still there, which means that central banks need to keep monetary policy tight for longer," said Veitmane.

UK's export-oriented FTSE 100 index climbed 0.6% as the sterling slid after data showed Britain's inflation eased more than expected in January. The index briefly breached the 8,000 points barrier level.

Shares of Barclays slumped 7.9% to the bottom of the STOXX 600 as the bank's earnings were pressured by surging costs, a collapse in deal fees and multi-million dollar fines.

European banks dropped 0.6%, while miners fell 0.7% on lower base and precious metal prices. [MET/L]

Among other stocks, Heineken rose 2.8% on higher-than-expected profit in 2022.

Ahold Delhaize jumped 8.0% as the retail group reported stronger-than-expected quarterly core earnings.

(Reporting by Shreyashi Sanyal and Amruta Khandekar in Bengaluru; Additional reporting by Bansari Mayur Kamdar; Editing by Sherry Jacob-Phillips and Josie Kao)