Lucy Raitano

An index of European real estate <a href=“https://www.reuters.com/markets/quote/.SX86P” target=“_blank”>(.SX86P)</a> stocks is on track for its biggest weekly gain since at least 2008, as a rally in government bonds brings yields down in Europe and around the world.

Sterling fell on Wednesday as traders stayed risk-averse and continued to digest data from Tuesday showing UK inflation unexpectedly <a href=”/world/uk/uk-inflation-rate-holds-67-september-2023-10-18/”>held at 6.7%</a> in September, raising the possibility of another rise in interest rates.

Europe’s luxury brands may have <a href=”″ target=“_blank”>sparkled</a> at Paris Fashion Week, but investors are questioning their taste for the shares in the face of a Chinese slowdown and interest rate uncertainty.

Shares in Round Hill Music Royalty Fund <a href=“https://www.reuters.com/markets/companies/RHM.L” target=“_blank”>(RHM.L)</a>, which owns the copyrights to work of major artists such as the Beatles, soared as much as 67% on Friday after a <a href=”/markets/deals/alchemy-copyrights-buy-round-hill-music-about-469-mln-2023-09-08/”>$496 million</a> buyout offer from Alchemy Copyrights.

Sterling held at a three-month low against a stronger dollar on Thursday, as traders focused on dovish signals from the Bank of England and moderating corporate inflation expectations.

The pound ticked higher against the dollar and euro on Tuesday as traders await comments by Bank of England Chief Economist Huw Pill later this week for more direction on the central bank’s next move.

UK homebuilder shares tumbled on Monday, set for their biggest one-day drop in over six weeks, led by a 14.9% fall in Crest Nicholson <a href=“https://www.reuters.com/markets/companies/CRST.L” target=“_blank”>(CRST.L)</a> shares which plunged after the residential housebuilder cut its full-year profit view.

Sterling fell against the U.S. dollar and the euro on Wednesday, holding close to last week’s one-month low as traders stay cautious on the currency and focused on the weak UK economy.

The euro zone blue-chip index of shares <a href=“https://www.reuters.com/markets/quote/.STOXX50E” target=“_blank”>(.STOXX50E)</a> rose to its highest level since December 2007 on Thursday, after the European Central Bank raised interest rates, as expected.

Euro zone manufacturing activity is deteriorating fast, as evidenced by Monday’s <a href=”/markets/europe/euro-zone-business-downturn-deepens-far-more-than-thought-july-pmi-2023-07-24/”>Purchasing Managers surveys</a>, and yet European cyclical stocks are on a tear versus their defensive counterparts - a dynamic analysts say can’t last.