European shares hit record high as real estate stocks surge

By Pranav Kashyap

(Reuters) -European shares rose to an all-time high on Friday, boosted by real-estate stocks, with the benchmark set to gain for a fourth straight week, although caution prevailed ahead of a key inflation reading for the Euro zone.

The pan-European STOXX 600 index was up 0.3% at 526.46 points by 0845 GMT, beating its previous record of 525.59 hit in June.

The benchmark was on track to gain 1.6% for the week, extending its rally into the fourth week, which would be its longest in more than five months. The STOXX 600 was also set to rise for a second straight month, a trend last seen nearly six months ago.

Rate sensitive real-estate stocks' 1.5% rise boosted the index on the day, with the markets expecting a 25 basis point rate cut when the European Central Bank meets in less than two weeks.

Shares had slipped earlier in the month on fears of a recession in the United States, which have since faded.

The STOXX 600 has gained in 16 out of the last 20 sessions and risen nearly 10% from a six-month low on Aug. 5, marking a robust recovery.

Investors now expect at least a 25-basis-point rate cut in the U.S. next month.

Adding to the upbeat mood were comments from ECB board member Isabel Schnabel, who said that inflation will fall back to the 2% target by the end of 2025.

All eyes are now on Euro zone and Italian consumer prices and EU unemployment data that is set to drop at 0900 GMT.

Also on investors' radar will be remarks from the European Central Bank's board member Kerstin af Jochnick at 1400 GMT.

"Investors are looking for sign for European economic growth to stabilize and turn around and did get a couple of prints along that direction," Arun Sai, senior multi-asset strategist at Pictet Asset Management, said.

"We shouldn't read too much into it. The market has gotten ahead of itself in terms of how front-loaded these cuts would come and we don't yet expect consecutive cuts every meeting."

The French benchmark CAC 40 gained 0.4% on Friday after data showed consumer spending grew in August.

Spain's IBEX 35 gained 0.6% after retail sales data showed an uptick of 1% in July.

Germany's DAX was up 0.1% data showed unemployment rose less than expected.

Tech stocks weighed on the European index, falling 0.5% after a near 1% jump in the previous session.

Danish medical equipment maker Ambu slumped 13.5% after reporting their third-quarter results.

In the U.S., personal consumption expenditure data is due later in the day.

(Reporting by Pranav Kashyap in Bengaluru; Editing by Savio D'Souza and Mrigank Dhaniwala)