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German stocks led gains in Europe on Wednesday after data indicated a decline in inflation in the country’s most populous state, strengthening expectations that the European Central Bank will cut interest rates next year.
According to Reuters, the German DAX index rose 1% to touch the highest level in four months after data showed that consumer prices in the state of North Rhine-Westphalia fell 0.3% on a monthly basis in November and rose 3% on an annual basis.
Preliminary inflation data for Germany will be published later today, and overall inflation data in the euro zone will be published on Thursday.
European bond yields fell, with German 10-year bond yields falling to the lowest level in more than three months at 2.4%.
The European STOXX 600 index rose 0.5%, with shares in the interest-rate-sensitive real estate sector rising by more than 2%.
Traders expect interest rates to be reduced by more than 105 basis points in 2024 from an expectation of about 95 basis points the previous day.
Although most regional markets achieved gains, the British Financial Times 100 index fell 0.1%, with the pound sterling rising to its highest level in three months.