Europe's STOXX 600 at five-week high as luxury firms, chipmakers jump

By Shashwat Chauhan and Pranav Kashyap

(Reuters) - European shares rose nearly 1% on Thursday, with luxury stocks boosted by Richemont's upbeat earnings update and semiconductor firms making gains after TSMC reported record quarterly profit.

The pan-European STOXX 600 had risen 0.9% to 519.81 points to its highest since mid-December.

France's benchmark index, which includes major luxury stocks, rose to a near three-month high, outperforming other exchanges in the region.

Richemont shares surged 16.3% after the owner of the Cartier jewellery brand beat quarterly sales expectations, a positive sign for the high-end luxury sector over the key holiday season.

A gauge of European luxury firms advanced 6.7%, logging its best day in nearly four months. LVMH shaers jumped 9.1%, Dior rose 8.6%, Kering gained 4.6% and Hermes was up 4.9%.

Deutsche Bank said the results will "add to the debate that the more premium luxury brands are likely to outperform, the luxury slowdown is more cyclical than structural (at least at the high-end) and that there is enough growth in the rest of the world to offset China weakness."

The tech index, which houses the bulk of European chipmakers, advanced 1.9% after TSMC, the world's largest contract chipmaker, logged a record quarterly profit and said it expects hefty first-quarter revenue growth.

The STOXX index's gain on the day added to a jump on Wednesday, its biggest single-day rise in four months, after an easing core U.S. inflation reading kept potential rate cuts by the Federal Reserve on the table.

On the macro front, the European Central Bank needed to cut interest rates cautiously and gradually but further policy easing was likely coming given weakening price pressures, according to the accounts of its Dec. 11-12 meeting.

"The level of expectations in Europe is relatively low and because of that there is a potential for some upside surprises," Fiona Cincotta, senior market analyst at City Index.

Global markets have been on edge about the implications of U.S. President-elect Donald Trump's proposed policies, including trade tariffs, and as a strong batch of U.S. data recently kindled fears of fewer Fed rate cuts.

After the inflation data, retail sales increased 0.4% in December, compared with a 0.6% rise expected by economists polled by Reuters.

Investors now gear up for the first wave of earnings in Europe and Trump's inauguration on Jan. 20.

Among other notable stock moves, Zalando rose 8.6% after Europe's biggest online retailer said it expected profit in 2024 to beat its own forecasts.

Orion added 7% after the Finnish drugmaker hiked its 2024 revenue and operating profit outlook.

Airbus rose 1.8% after Morgan Stanley named the planemaker its top pick among aerospace companies.

(Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru; Editing by Janane Venkatraman, Savio D'Souza and Alexander Smith)