European Markets Rise on Fed Rate Cut Hopes and Fitch's French Credit Verdict

European shares saw a modest increase on Friday, with the pan-European STOXX 600 index climbing 0.1% to 556 points. This rise is poised to mark the first weekly gain in three weeks, buoyed by expectations of an impending interest rate cut by the U.S. Federal Reserve next week to support the labor market.

The aerospace and defence sector emerged as a standout, with a significant surge of 5.4% over the week, its largest rise in over four months. This rally was triggered by heightened geopolitical tensions, notably after Poland shot down a potential Russian drone. Meanwhile, Novartis saw a 2% drop after a downgrade from Goldman Sachs citing competition from generics.

As the day progresses, investor attention turns to Fitch's rating review of French credit. Concerns are mounting about a potential downgrade as French President Emmanuel Macron navigates political challenges, having appointed his fifth prime minister in just two years amid contentious fiscal policy debates.

(With inputs from agencies.)