European shares climbed on Friday, buoyed by business activity data that came in better than anticipated. The Stoxx Europe 600 index closed 0.6% higher, marking its biggest one-day advance since August 4. Figures showed an unexpected improvement in eurozone private sector activity during August, with manufacturing growth accelerating at its quickest pace in over four years.
Across sectors, mining stocks outperformed as metal prices rose, while utility and energy shares were among the weakest performers. However, compiled data indicated that trading volumes on the benchmark index were roughly 20% below the 20-day average, reflecting typically thin summer activity.
The market had experienced two consecutive weeks of declines as the boost from a strong earnings season faded. With geopolitical uncertainty lingering, investors remain on the lookout for new market drivers. Still, the index currently sits only about 1% below its record high. A Bloomberg survey showed that Goldman Sachs Group Inc. and JPMorgan Chase & Co. continue to hold optimistic outlooks for European equities. On the flows front, Bank of America cited EPFR Global data indicating that European equity funds have recorded inflows for three straight weeks.
Joachim Klement, a strategist at Panmure Liberum, commented, "After a robust earnings season, European equities are taking a breather. Investors will be paying close attention to the Jackson Hole symposium to gauge just how concerned central bankers are about rising long-term yields."
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