European stocks hit records despite heatwave costs

European stock markets have reached record highs in August even as summer heatwaves raise costs and disruption risks for agriculture, transport, tourism and other industries.

The Paris, Frankfurt, Madrid and Milan exchanges all hit records, in line with recent all-time highs for Wall Street's main indexes. Market analysts said investors have focused more on corporate earnings and near-term inflation concerns than on climate-related disruption.

Florian Ielpo, head of macroeconomic research at Swiss bank Lombard Odier, said the strong earnings season and concern over inflation linked to Iran had left global warming as a secondary issue for markets.

Ipek Ozkardeskaya, senior analyst at Swissquote, said climate change could become a central risk for European equities over the next 10 to 15 years, potentially weakening productivity and growth while pushing food, energy, insurance and infrastructure costs higher.

France's Environment Minister Monique Barbut said this month that this summer's heatwaves would cost 10 to 15 billion euros. Heat is threatening harvests across Europe, and Thyssenkrupp warned that record-low Rhine levels were threatening raw material deliveries. The steel company's shares still rose nearly 10 percent on Thursday as investors focused on its profit outlook.

Some investment managers said clients are showing more interest in sustainable funds and investment themes tied to electrification, decarbonisation and independence from fossil fuels. Metzler Asset Management said it had not yet seen a broad structural buying shift toward companies most advanced in those areas.