European stocks rose to a record high on Friday, driven by the continued rise of shares of companies affected by the Chinese economy thanks to news of massive economic stimulus measures taken by Beijing.

Gains in shares of the Italian luxury fashion company Moncler and luxury goods companies also supported the European STOXX 600 index, according to Reuters.

Best weekly performance

The index rose 0.2%, recording the highest level ever at 526.70 points today, heading towards recording the best weekly performance in more than a month if it continues to rise.

Shares of luxury goods companies, which focus on China, were a major support for the gains of the European index, with shares of “Hermes”, “Kering”, “Hugo Boss” and “Burberry” rising by between 3 and 4%.

Chinese stocks are also on track to record their best weekly performance since 2008.

Moncler shares jumped 11.8% after its CEO, Remo Ruffini, concluded a partnership deal with LVMH to invest extensively in the Italian group of luxury goods. The personal and household goods sector in the region also led the sectors’ gains, rising 1.6%.

Consumer prices in France grew less than expected in September, with the annual inflation rate recording the lowest level since July 2021 at 1.2%, and the French CAC 40 index rose by 0.3%.

The Spanish IBEX 35 index stabilized after data indicated a decline in inflation in the country to 1.7%.

Investors are awaiting the release of consumer confidence data in the euro zone and employment data in Germany, and today, Friday, the chief economist at the European Central Bank, Philip Lane, will speak about financial policy.

Chinese stimulus

China reduced the amount of cash that banks must keep in reserve on Friday, in an attempt to free up funds for financial institutions and enhance its efforts to boost the country's slowing economy, a step that would allow about $142.6 billion of liquidity to be pumped into financial markets.

The reduction rate reached 0.5%, and the People’s Bank said in a statement that the move aims to “strengthen monetary policy adjustment” to create a “good” environment for the steady growth of the Chinese economy.

The People's Bank indicated that the weighted average required reserve ratio will decrease to about 6.6% after the decision.

The Chinese central bank also lowered borrowing costs for seven-day reverse repurchase agreements earlier in the day as part of the largest stimulus package since the coronavirus pandemic.