US stock markets rate hike
Stocks in the region are trading at a two-month high Image Credit: Shutterstock

European shares were slightly higher Friday, marking a second week of gains, driven by chemical and retail sectors as US trading resumed following the Thanksgiving holiday.

The Stoxx Europe 600 Index ended the session 0.3 per cent higher, with chemicals leading the rally as BASF SE gained following a Bloomberg News report that Abu Dhabi National Oil Co. (ADNOC) is exploring a potential acquisition of Wintershall Dea, the European energy explorer it backs. Retailers and energy stocks also climbed.

Neither BASF nor ADNOC commented on the deal, the report added.

Stocks in the region are trading at a two-month high and the main index is set for its best month since January. Sentiment has been boosted by hopes that easing inflation will permit for more dovish central banks.

The European Central Bank is now at a point where it can pause and assess the impact of its tightening, President Christine Lagarde said Friday, while Governing Council Member Robert Holzmann said there's equal probability of a rate hike or cut in the second quarter of 2024.

Among other individual moves, Team17 stock dropped by a record 43 per cent in London as the maker of the Dredge fishing adventure videogame warned some of its titles are not performing as well as it had expected, with peers also coming under pressure.

Investors have flocked into equities at the fastest pace in almost two years, according to a Bank of America Corp. note citing EPFR Global data.

Global stock funds have seen inflows of about $40 billion in the two weeks through Nov. 21, while European equities had their 37th week of outflows at $32 million.