April 6, 2017 / 9:24 AM / 3 years ago

European real estate stocks hit 6-month high on cooling rate hike expectations

MILAN, April 6 (Reuters) - Europe’s real estate stocks index rose to a six- month high while banks fell on Thursday after remarks from European Central Bank chief Mario Draghi poured cold water on expectations of tightening measures.

Both Draghi and chief economist Peter Praet said the ECB would stick to its policy plan including bond buying and record-low rates for some time to come as it is not yet convinced the euro zone economy is back to rude health.

“Real estate is recovering from worries that rates could start a phase of strong increases. Prospects that the central bank will remain cautious make the sector attractive,” said Giuseppe Sersale, fund manager at Anthilia Capital in Milan.

Higher interest rates make stable yields offered by real estate firms less attractive. On the other hand, stocks in European banks, whose margins are boosted when rates rise, were under pressure, with the sectoral index down 0.7 percent. (Reporting by Danilo Masoni, Editing by Vikram Subhedar)

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