By Johann M Cherian, Anjana Jayakrishnan Nair and Avinash P
Nov 12 (Reuters) - Europe's benchmark STOXX 600 eased off a record high but still eked out a slim gain on Thursday, boosted by strong earnings
and a rotation out of AI-linked stocks in Asia and the US.
The pan-European index closed 0.14% higher at 664.01 points after touching an all-time peak of 666.58 points earlier, as oil prices edged higher. Germany's DAX added 0.4%, hitting a record high.
European equities have been supported by robust earnings this quarter, despite lingering inflation and further rate hike worries. Prices of oil, a key import for Europe, turned higher on Thursday, but remained below $100 a barrel.
"If we are able to get a truce and an agreement between the US and Iran, that will help lower energy prices, which in turn should help allow for an improvement of sentiment among the European consumer... that should help drive a broadening out of the European equity market," said Aneeka Gupta, equity strategist at WisdomTree.
Siemens rose 1.7% after the industrial technology group raised its mid-term growth outlook.
Adecco Group jumped 14.7% after reporting stronger-than-expected third-quarter operating income and pointing to improving hiring conditions for permanent roles.
Europe's smaller exposure to AI-linked stocks has also supported its outperformance versus Asian and US peers as investors increasingly question the sustainability of the AI trade amid stretched valuations, debt-funded spending and the prospect of tighter regulation following the Democrats' US midterm electoral sweep.
Investors have instead taken a liking to defensives, with European healthcare and consumer-related sectors such as food & beverage, travel & leisure and retail posting double-digit gains this quarter.
Energy and chemicals have continued to outperform on an annual basis, benefiting from higher commodity prices due to the Iran conflict.
"The European market is home to a different set of companies, with greater exposure to consumer-facing businesses, industrials and financials, and that has driven outperformance during a period when technology stocks have taken a bath," said Mark Preskett, senior portfolio manager at Morningstar Wealth Europe.
The STOXX 600 has risen nearly 5% so far this quarter, while the S&P 500 is down 0.2%. Societe Generale analysts said 13 of the benchmark's 20 sectors have outperformed the index since the US midterm elections.
However, not all sectors have shared in the rally. Luxury stocks and autos have been among the index's biggest laggards, down more than 17% each this year.
The luxury sector has been grappling with weakening demand in key market China, while automakers such as Volkswagen and Volvo have seen some of the biggest hits to earnings this quarter on rising competition from Chinese electric-vehicle makers.
Concerns also prevail about higher government debt in countries such as France and Italy ahead of pivotal elections next year, which could test investor resilience.
In the US, Jensen Huang resigned as Nvidia, clouding the outlook for the AI powerhouse and the broader sector. European tech shares fell 0.5%.
(Reporting by Johann M Cherian, Anjana Jayakrishnan Nair and Avinash P in Bengaluru; Editing by Shilpi Majumdar and Alex Richardson)
