European shares rebound as Ukraine ceasefire hopes uplift sentiment

FRANKFURT: European shares bounced back on Wednesday following four sessions of declines on optimism around positive developments in the Ukraine-Russia conflict, while a cooler-than-expected US inflation report also helped sentiment.

The pan-European STOXX 600 closed 0.8%, snapping its longest losing streak since December.

The US agreed on Tuesday to resume military aid and intelligence-sharing with Kyiv following Ukraine’s willingness to accept a 30-day ceasefire proposal with Russia.

“It’s creating some optimism given that if we do see a ceasefire and a potential peace deal coming through, that could reduce energy costs in Europe and there’s a lot of benefits coming from that,” said Fiona Cincotta, senior market analyst at City Index.

Most sub-indexes on the STOXX 600 clocked gains, led by gains in European banks and industrial goods and services.

Zealand Pharma jumped over 37%, logging its best day on record, after Swiss pharmaceutical company Roche acquired rights to an obesity therapy by the firm in a collaboration deal worth up to $5.3 billion. Index heavyweight Roche gained 3.6% to trade at an over two-year high. The healthcare index was up 0.4%.

Retailers, on the other hand, declined 3%, hit by a 7.5% fall in Inditex after the Zara-parent reported a slower start to its first quarter, beginning February 1.

Puma’s 19.9% tumble to a more than eight-year low after the German sportswear group gave a disappointing outlook for first-quarter sales weighed on the personal and household goods sector.

Meanwhile, a cooler-than-expected inflation reading in the US also helped sentiment.

“It gives the Fed a little more flexibility to be able to support the economy if it needs to with rate cuts. But the upside is being capped by concerns regarding trade wars and recession concerns,” said Cincotta.