Frankfurt (Reuters) - The lowest inflation rate in two and a half years has fueled hopes of interest rate cuts on the European stock markets in the near future, boosting share prices.

The DAX overcame the psychologically important 16,000 mark and gained 1.1 percent to 16,174 points. This was the highest it had been in four months. The EuroStoxx50 climbed 0.7 percent to 4378 points.

Inflation fell to 3.2 per cent in November after 3.8 per cent in October, the lowest level since June 2021. The decline is surprisingly sharp: Economists had only expected it to fall to 3.5 percent. "The ECB will come under increasing pressure to cut interest rates in the future," said Stuart Cole, chief economist at brokerage firm Equiti Capital. Thomas Altmann from asset manager QC Partners shares this view: "If the inflation rate for the entire eurozone published tomorrow falls into a similar range, the discussions about the timing of the first interest rate cut will become even louder and livelier."

FED REPRESENTATIVES FUEL HOPES ON WALL STREET

Hopes of a rate cut also brightened the mood on Wall Street. The most important futures were up as a result. Fed representative Christopher Waller hinted on Tuesday that the US central bank could cut interest rates within a few months if progress in reducing inflation continues. "This was the first time a Fed official has talked about the possibility of easing," said Charalampos Pissouros, an analyst at broker XM. Bets on a first cut in March 2024 increased on the futures markets. In addition, the yield on the two-year US government bond, which is particularly sensitive to possible changes in monetary policy, fell to its lowest level in more than four months at 4.664% at times.

On the crude oil market, prices rose by around 1.5 percent one day before the important meeting of the Opec+ group. North Sea Brent1 stood at 82.85 dollars per barrel. US light oil WTI was quoted at 77.68 dollars per barrel. The talks between the producer states on Thursday are likely to be difficult, and an extension of the previous agreements is more likely than an extension of the production cuts, said four people close to the organization. Speculation of short-term supply bottlenecks after a severe storm in the Black Sea region caused supply disruptions had a price-driving effect. The recent fall in the dollar also helped commodity prices.

On the corporate side, Aroundtown shares slipped by up to eleven percent among the second-line stocks, but subsequently limited their decline to around six percent. The real estate investor earned less in the first nine months as a result of disposals and higher interest rates.

Borussia Dortmund investors, on the other hand, celebrated the team's entry into the last sixteen of the Champions League. The shares of the German runners-up soared by almost eight percent. Advancing to the knockout round secures BVB a sum of 9.6 million euros.

On the Amsterdam stock exchange, Philips shares fell by more than five percent. The background to this is a warning from the Food and Drug Administration (FDA) in the USA about the use of sleep apnea devices.

(Report by Nette Nöstlinger and Anika Ross, edited by Christian Götz. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)