German stocks rose on Wednesday after inflation data came in better than expected in the largest economy in the Eurozone, boosting hopes that the European Central Bank will cut interest rates next year. Meanwhile, Italian stocks approached their highest level since 2008. The DAX index increased by 1.1 percent, reaching a four-month high after data showed a bigger-than-expected decline in inflation in Germany in November. European bond yields fell, with the yield on 10-year German bonds dropping to its lowest level in over three months at 2.4 percent.
Stuart Cole, Chief Macro Economist at Equiti, stated, "The European Central Bank will face increasing pressure in the future to cut interest rates. Growth in the Eurozone is stable, if not already in recession, and inflation is headed in the right direction." The Stoxx 600 index increased by 0.4 percent, with both interest-sensitive real estate stocks and technology stocks rising by more than 1.5 percent each. The leading stock index in Italy rose by 1.1 percent, reaching its highest level since August and nearing levels last recorded in 2008, following a recent upgrade by Moody's rating agency, which changed the country's debt outlook to stable.
