PARIS: European stocks slipped from session highs after a report that Russia’s Gazprom has declared force majeure on some gas supplies to Europe stoked worries about an energy crunch in the continent.
The pan-European STOXX 600 index, which had risen as much as 1.5% to hit three-week peaks earlier in the session, cut gains to close 0.9% up.
Germany’s DAX ended 0.7% higher, above session lows hit following the report. It had climbed as much as 1.5% in morning trade.
The letter seen by Reuters said Gazprom, which has a monopoly on Russian gas exports by pipeline, could not guarantee gas supplies because of “extraordinary” circumstances outside its control.
A trading source said the letter concerned supplies through the Nord Stream 1 pipeline that brings gas to Germany.
Maintenance on Nord Stream 1 is scheduled to end on July 21 and investors had feared that Russia could stall the resumption of gas supply amid its war with Ukraine. This could result in a gas supply crunch in Europe and keep prices elevated for longer.
“Germany is going to find it tougher and have to pay more for energy and certain sections of their manufacturing industry and life in general will take a knock. If their economy takes a knock that will feed out to the wider eurozone,” said David Madden, market analyst at Equiti Capital.
Markets had enjoyed an upbeat session earlier in the day on easing fears about a 100-basis-point interest rate hike by the US Federal Reserve this month, and hopes of fresh China stimulus amid COVID-19 flare-ups.
Gains were led by miners that jumped 3%, followed by oil and gas and banks stocks, up 2.8% and 2.1%, respectively.
The focus this week will also be on the European Central Bank, which is expected to raise interest rates next week for the first time since 2011 to combat inflation running at a record high of 8.6%.
The STOXX 600 has slipped 14.4% year-to-date as worries about slowing growth in China, the world’s second-largest economy, aggressive central bank policy tightening globally and the fallout of the Russia-Ukraine war dented risk appetite.
In earnings-driven moves on Monday, Finland’s Nordea jumped 6.1% as a rise in earned loan interests boosted second-quarter operating earnings.
Shares of meal delivery companies Just Eat Takeaway and Germany’s Delivery Hero surged 8.4% and 8%, respectively, after their British peer Deliveroo kept its margin outlook of 1.8% unchanged.
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