The leading German index climbed by 0.4 percent to 16,466 points on Tuesday, bringing it within sight of its previous record from the end of July. Its European counterpart, the EuroStoxx50, rose similarly strongly to 4434 points. "It will be interesting to see if and when the money that is still parked loses patience and jumps on the train, which is currently only moving slowly but is still moving," said expert Jürgen Molnar from the broker RoboMarkets. Small positive impulses could be enough.

Investors were focusing in particular on the monthly US labor market figures due on Friday. "If these confirm the slowdown from October, the market could shift up a gear again and the pressure on the skeptics of the rally could increase," Molnar stated with a view to market hopes of falling interest rates next year. However, it has become more difficult to find convincing reasons for further purchases at this high price level, said Jochen Stanzl, analyst at broker CMC Markets. "The weakness of the oil price is also causing headaches, as it also points to a stronger weakening of the global economy in the coming months."

FALLING INFLATIONARY PRESSURE

Manufacturers' prices in the eurozone, which fell significantly again in October, point to a further decline in inflationary pressure. Producer prices in industry fell by 9.4 percent compared to the same month last year, after falling by 12.4 percent in September. At the beginning of the year, double-digit percentage increases were still the order of the day. According to an ECB survey, consumers in the eurozone have not shaken their short-term inflation expectations.

In view of the "remarkable" decline in inflation, the European Central Bank can probably keep the door closed to further interest rate hikes for the time being, according to ECB Director Isabel Schnabel: "The latest inflation figures make a further interest rate hike rather unlikely," she said in an interview with Reuters. "The final nail in the coffin for further interest rate hikes, even if nobody expected it," stated economist Andrzej Szczepaniak from the financial house Nomura.

The prospect of falling interest rates in the coming year prompted investors to increasingly turn to government bonds again. In turn, the yield on ten-year German government bonds fell by up to seven basis points to 2.28 percent, the lowest level in six months. The euro fell by up to 0.3 percent to 1.0802 dollars.

ERICSSON SOARING

Among the individual stocks, the award of the contract for the modernization of AT&T's mobile network made Ericsson investors cheer. Shares in the Swedish network equipment provider shot up by almost ten percent at the peak in Stockholm after the US telecoms group awarded Ericsson the five-year, 14 billion dollar contract the previous day. On the other hand, investors in Finnish competitor Nokia, which lost its position as AT&T's most important supplier, were left with long faces. Nokia shares fell by up to ten percent in Helsinki. "This is a significant blow for Nokia in the particularly important North American region," said analyst Atte Riikola from the analyst firm Inderes.

In contrast, the partial withdrawal of Barclays' long-standing major shareholder Qatar weighed on the British bank. The shares fell by up to 4.5 percent in London after the investor threw a package of Barclays shares worth 510 million pounds (595 million euros) onto the market on Tuesday night. Carl Zeiss Meditec shares also came under pressure, losing around three percent. According to one trader, the medical technology group was hit by an analyst's assessment. The US bank JP Morgan took up the valuation of the share with the recommendation "Underweight".

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