LONDON: European stocks ended higher for the first time in five days on Monday, as oil, banks and utility shares gained on hopes that a strong euro zone economic recovery would outweigh risks from a global slowdown.
The pan-European STOXX 600 index was up 0.3% after hitting a three-week low last week. Asian stocks, however, fell following news of fresh regulatory crackdown on Chinese firms.
Global stocks have come under pressure recently after months-long gains on worries about inflation, tighter COVID-19 curbs in Asian economies, China’s regulatory moves, and growing views that central banks will soon start paring stimulus.
While those concerns remain, European investors took comfort as the European Central Bank last week raised its growth and inflation projections for this year and beyond, as the euro zone economy recovers quicker than expected from the pandemic shock.
“While we are used to seeing US markets lead the way, there is a feeling that we could see greater catch-up for Europe as high vaccination levels keep deaths relatively stable,” said Joshua Mahony, senior market analyst at IG.
Economy-sensitive sectors, including banks, oil and gas, and construction and materials, rose between 0.9% and 2.8%, while utilities climbed 1.6%.
All eyes will be on the US consumer prices data on Tuesday after soaring producer prices last week raised doubts about the US Federal Reserve’s view that inflation is transitory.
“Some central bankers will have you believe they are happy to hold back on tightening for now, we are seeing very clear signs that this spike in inflation is far from fleeting,” IG’s Mahony said.
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