(Sharecast News) - European shares edged higher on Tuesday, extending gains into the Christmas break as subdued holiday trading and a supportive lead from Wall Street underpinned sentiment.
The pan-European Stoxx 600 rose 0.35% to 588.81, with Germany's DAX adding 0.22% to 24,337.08 and the UK's FTSE 100 up 0.24% at 9,889.22, while France's CAC 40 slipped 0.21% to 8,103.85.
"London markets have been subdued on the last full day of trading before the Christmas holidays," said AJ Bell head of financial analysis Danni Hewson , adding that while miners were lifted by strength in precious metals, "there was no last-minute record-breaking boost for the FTSE 100 like the one briefly enjoyed by the pan-European Stoxx 600."
The modest advance followed a positive close on Wall Street on Monday, where major US indices finished higher in quiet pre-holiday trade.
Technology stocks again led gains as investors rotated back into growth names after last week's softer inflation data revived hopes of a year-end 'Santa Claus rally'.
Chipmakers Nvidia and Micron Technology both closed higher, helping to support broader risk appetite in European markets.
However, Hewson cautioned that optimism remains fragile, noting that "despite lingering concerns about tariffs, ongoing geopolitical uncertainty, nerves about a potential AI bubble and a myriad of cost of living concerns, many indices will have enjoyed a record breaking year - and there's still time for a Santa rally to top things off in style."
New car sales rise across the EU
Economic data in Europe showed a continued shift in the automotive sector towards electrification.
New car sales across the European Union rose 2.1% year on year in November to 887,491 units, up from 868,910 a year earlier, lifting total 2024 sales to 1.4% above the previous year, according to the European Automobile Manufacturers' Association.
Battery electric vehicle registrations jumped 44.1% to 188,730, taking a 21.3% market share versus 15.1% last year, while hybrid electric vehicles remained the most popular option with 301,819 sales, accounting for 34% of the market after a 4.2% annual increase.
Plug-in hybrid sales climbed 38.4% to 91,699, or 10.3% of the market.
In contrast, petrol sales fell 21.9% to 206,448 and diesel dropped 23.2% to 70,120, with combustion engines together making up just 31.2% of registrations, down from 40.9% a year earlier.
Despite the momentum, the ACEA said overall volumes remain well below pre-pandemic levels.
US macro data also fed into sentiment.
The US economy grew at an annualised rate of 4.3% in the third quarter, beating forecasts of 3.3% and accelerating from 3.8% in the prior quarter, driven by stronger consumer and government spending and exports, according to the Bureau of Economic Analysis.
"Delayed US economic data painted a mixed but resilient picture, with GDP growth accelerating to a two-year high of 4.3% annualised in the third quarter of 2025, well above expectations, supported by strong consumer spending, exports and government outlays," said Axel Rudolph, senior technical analyst at IG.
He added that "solid job gains and a sharp rise in corporate profits reinforced the view that the Fed will hold rates steady in January and may delay further cuts, although weaker durable goods orders highlighted emerging pockets of softness in manufacturing."
The stronger growth backdrop also tempered rate-cut optimism.
Hewson said that "good news about the US economy was bad news for Wall Street as a better-than-expected third quarter casts further doubt over the path of interest rates next year," adding that "GDP data can only show us where things were, not where things are going, which means investors will step into another year with more questions than answers."
Alongside headline growth, real final sales to private domestic purchasers rose 3%, up from 2.9%, while inflation measures ticked higher, with the personal consumption expenditures price index up 2.8% and the core PCE index rising 2.9%.
Separate US data showed industrial production rising 0.2% month on month in November, the biggest increase in four months, after a 0.1% decline in October, while capacity utilisation edged up to 76.0% but remained 3.5 percentage points below its long-run average.
Manufacturing activity in the Richmond Fed district improved in December but stayed in contraction, with the composite index rising to -7 from -15, as new orders, shipments and employment all improved but remained negative.
Commodity markets also provided support for parts of the European equity complex.
Rudolph noted that "copper plays catch up with gold and silver which continue to trade in record highs," adding that copper futures climbed to $5.5 per pound, their highest level since July, driven by renewed US tariff threats and supply disruptions in Chile and Peru, which "have tightened the global market and pushed pricing power towards miners."
Novo Nordisk surges, Ryanair in the red
In equities, Novo Nordisk surged 9.24% after the US Food and Drug Administration approved the first GLP-1 pill to treat obesity, giving the Wegovy-maker an edge over rival Eli Lilly, whose oral treatment remained under review.
"News that the pill form of Novo Nordisk's weight-loss drug has been given approval by US regulators supercharged the drug maker's shares, with the new boss already spelling out there would be no supply issues with this launch," Hewson said.
Zealand Pharma also advanced, rising 1.6%, while French biotech Abivax extended gains for a second session, adding 3.81%.
Danish renewables group Orsted rebounded 1.28% after falling 13% on Monday following news that the US Department of the Interior was suspending leases on several offshore wind projects, although the stock was slightly lower in afternoon trade.
On the downside, Ryanair slipped 0.17% in Dublin after Italy's competition authority fined the airline 255.7m for abusing its dominant position in dealings with travel agents.
Reporting by Josh White for Sharecast.com.
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