UPDATE 2-Real estate stocks power Europe's STOXX 600 to fresh three-month high

Reuters

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        * 
      ECB minutes justify more rate hikes on inflation fears
    

        * 
      Trading subdued due to U.S. holiday
    

        * 
      Adevinta jumps as it confirms FY target
    

  
 (Updates to close)
    By Sruthi Shankar and Devik Jain
       Nov 24 (Reuters) - Europe's STOXX 600 index closed at a
fresh three-month high on Thursday led by gains in real estate
stocks after minutes from the Federal Reserve's November meeting
signalled a slowdown in the pace of interest rate hikes.
    The pan-European STOXX 600 index  .STOXX  rose 0.5% to its
strongest level since Aug. 18, although trading volumes were
light due to a U.S. market holiday for Thanksgiving. 
    Wall Street ended with solid gains on Wednesday after the
U.S. central bank's meeting minutes showed a "substantial
majority" of policymakers agreed it would "likely soon be
appropriate" to slow the pace of interest rate hikes.
    "It was in line with expectations around signalling smaller
rate hikes, however, also underscoring that the terminal rate
will be higher," said Karim Chedid, head of investment strategy
for iShares EMEA at BlackRock.
    "What is different for the ECB is that the recession we're
expecting for Europe is going to be more protracted. It means
that the ECB may not be able to go as far as the Fed and they
will have to eventually start cutting rates sooner than the
Fed."
    The European Central Bank's minutes of the October meeting
showed policymakers feared that inflation may be getting
entrenched, justifying more rate hikes, but for how long and how
much remained a debate.
    Separately, ECB board member Isabel Schnabel, the most
influential hawk, pushed back against recent calls from many of
her colleagues for smaller interest rate increases, saying this
was premature and could even prove counter-productive.
    "Recent comments by ECB officials suggest that the
discussion at the December meeting will be much more heated and
controversial," Carsten Brzeski, global head of macro at ING
said in a note.
    "We currently expect the ECB to hike rates by 50bp in
December and by another 25bp in February. The big question will
be around quantitative tightening (QT) or in other words, the
shrinking of the ECB's balance sheet."
    Adding to the positive mood on Thursday, a survey by the Ifo
Institute showed that German business morale rose more than
expected in November and pessimism heading into the coming
months eased considerably.
    The benchmark STOXX 600 has rallied more than 15% from its
Sept. 29 closing lows as an upbeat earnings season and hopes of
smaller interest rate hikes by the Fed overshadowed worries
about a potential recession in Europe. 
    The rate-sensitive real estate sector  .SX86P  was the top
performer in Europe, up 2.5% as the German government bond
yields slid.  GVD/EUR 
    LEG Immobilien  LEGn.DE  climbed 6.8% after Morgan Stanley
upgraded the German real estate firm's stock to "overweight".
    Shares of world's largest classified ads company Adevinta 
 ADEA.OL  and Polish insurer PZU  PZU.WA  jumped 7.2% and 6.6%,
respectively after posting strong third-quarter results.
 (Reporting by Sruthi Shankar and Devik Jain in Bengaluru;
Editing by Anil D'Silva, William Maclean)
 ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223
8780; outside U.S. +91 80 6182 2787;))

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