PARIS: European shares closed higher on Friday but marked weekly losses as investors took a cautious view of the earnings season and the upcoming central bank decisions, although China’s reopening from COVID-19 lockdowns offered some relief.
The pan-European STOXX 600 rose 0.4%, lifted by travel & leisure and retail stocks.
Spain’s Cellnex jumped 9.8% after a media report said American Tower and asset manager Brookfield were weighing a possible takeover bid for the mobile phone tower operator.
However, the benchmark STOXX 600 posted weekly losses of 0.1% despite hitting a nine-month high earlier in the week, weighed by disappointing earnings reports, weak US economic data and hawkish comments from central bankers.
“We’ve seen this robust value in European stocks, largely underpinned by three factors: better-than-expected economic outlook given the milder winter conditions in Europe, China reopening and signs of peaking inflation,” said Laura Cooper, a senior investment strategist at BlackRock.
“But if you take a step back, from a policymaker’s perspective, they are still in a position to continue to raise rates as inflation remains uncomfortably high. We still remain cautious on European equities and it is about taking a selective approach.” Investors will closely monitor further commentary from Christine Lagarde after the ECB President and fellow policymaker Klaas Knot on Thursday said investors were underestimating the central bank’s determination to bring inflation back to its 2% target.
The Federal Reserve is widely expected to hike interest rates by 25 basis points at its policy meeting in February, while the ECB is seen hiking by 50 basis points.
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