Spain's Ibex-35 stock index touched its highest level since February 2020 on Thursday, just before the COVID-19 pandemic confinements were extended, as the market speculates on the timing of interest rate cuts.

After recent signs that the Fed may have already peaked on rising borrowing costs, optimism deflated slightly on Wednesday with the release of macroeconomic data that showed greater-than-expected strength in the economy and thus may indicate that long-awaited rate cuts are still some way off.

Against this backdrop, the focus will be on macroeconomic indicators coming out of the US, including import prices, weekly unemployment figures, the Philadelphia Fed's activity index (all at 13:30) and industrial production and capacity (14:15).

According to Renta 4, these data will show "whether this scenario (a soft landing of the economy) is feasible or, on the contrary, it is to be expected that the US economy will remain resilient, making it difficult to control inflation and thus the start of the rate cuts.

Markets will also be watching closely the talks between US President Joe Biden and his Chinese counterpart Xi Jinping, which brought some optimism for initial agreements on military matters and on pacts to curb fentanyl production, but were clouded by the US leader's comments calling Xi a dictator.

This context translated into a new advance in the Spanish stock market, which could be the fourth in a row. At 08:23 GMT on Thursday, the selective Spanish stock market Ibex-35 was up 57.20 points, 0.59%, to 9,697.90 points, its highest level since mid-February 2020, surpassing the psychological barrier of 9,700 points at times.

Meanwhile, the FTSE Eurofirst 300 index of large European stocks fell by 0.08%.

In the Spanish banking sector, Santander rose 1.04%, BBVA gained 0.24%, Caixabank advanced 0.75%, Sabadell gained 1.38%, Bankinter gained 0.06% and Unicaja Banco rose 0.40%.

Among the large non-financial stocks, Telefónica gained 0.40%, Inditex traded almost flat, Iberdrola gained 0.97%, Cellnex gained 0.75%, and the oil company Repsol fell 0.03%.

Outside the Ibex, Talgo rose 5% after indicating that it has received informal indications of interest in launching a takeover bid from an unidentified Hungarian investor. The news added to hopes of a wave of buyout deals, following the announcement of a takeover bid for Prosegur on Wednesday.

Construcciones y Auxiliar de Ferrocarriles rose even more, up 6.19%, after announcing a 56% increase in profit and indicating that it is on track to meet its annual targets.

(Information by Tomás Cobos; edited by Flora Gómez)