Europe's STOXX 600 closes higher but gains limited by tech, defence

Updates after markets close

By Twesha Dikshit and Sukriti Gupta

Aug 20 (Reuters) - Europe's STOXX 600 closed higher on Wednesday boosted by consumer and healthcare stocks, while declines in tech and defence stocks limited gains, ahead of a crucial meeting of global central bankers.

The pan-European STOXX 600 index .STOXX closed 0.2% up, at its highest closing level in more than five months.

However, most major regional bourses fell, with Germany's DAX .GDAXI down 0.6%, but the UK's FTSE 100 .FTSE hit a record high and closed 1.1% higher.

Data showed UK inflation rose to 3.8% in July, its highest since early 2024 and in line with the Bank of England's expectations.

Among sectors, consumer-facing food and beverage stocks .SX3P gained the most, up 2.3%, led by Nestle's NESN.S 3.6% rise. Personal goods and household companies .SXQP followed, gaining 1.4%.

Optimism of progress towards ending Russia's war in Ukraine persisted, as the U.S. and its allies prepared to work out what military support for Ukraine might involve as part of a deal, but caution also lingered as the details were not clear.

Shares of European defence-linked companies .SXPARO dropped 1.4%, after suffering their worst day in more than a month in the previous session on expectations of a Ukraine peace deal.

"Even if the war ends, there's a huge restocking cycle that needs to go on for countries to replenish their weapons, which will keep these companies in business for a long time," said Michael Field, chief equity strategist at Morningstar.

"The market is slightly flawed in its thinking about the (defence) sector."

Heavyweight tech stocks .SX8P fell 0.5%, tracking a tech sell-off in the U.S., over concerns over an AI stock bubble and uncertainty around the interest rate outlook.

This week, the focus will be on the Federal Reserve's annual Jackson Hole symposium, where Chair Jerome Powell and other major central bank heads are set to speak.

"There's always a big expectation and that kind of gets moderated down... I would caution anything massive coming out of this," said Field.

The STOXX 600 has gained about 10.2% so far this year on hopes of higher spending in the bloc, a shift to European assets in the first half of 2025 and rising expectations of a U.S. interest rate cut.

Rockwool ROCKb.CO fell 16.2%, the most on the STOXX 600, after the Danish mineral wool maker lowered its full year guidance. The stock logged its worst day in more than two-and-a-half years.

Alcon ALCC.S slumped 9.4% in its biggest one-day fall in more than five years, after cutting its 2025 net sales forecast on expected impact of U.S. tariffs.

British medical equipment maker Convatec CTEC.L announced a $300 million share buyback program, sending its shares up 5.6% to the top of the STOXX index.

(Reporting by Twesha Dikshit, Sruthi Shankar, Sukriti Gupta and Purvi Agarwal in Bengaluru; Editing by Sherry Jacob-Phillips, Shilpi Majumdar and Barbara Lewis)

((Twesha.Dikshit@thomsonreuters.com;))