European shares rallied at midday ahead of US non-farm payroll figures later on Friday as they waited to see if Russian leader Vladimir Putin would make good on his threat to cut gas supplies to the continent unless foreign buyers started paying up in roubles.
The pan-European Stoxx 600 index extended gains to be up by 0.60% with all regional bourses following suit.
Putin on Thursday threatened to cut off gas supplies unless paid in local currency from April 1. Most European states, including Germany, a major customer, dismissed the dictator’s demand as blackmail.
Europe’s biggest economy has already activated an emergency plan that could lead to rationing.
Crude oil prices fell overnight after the US announced the largest ever release from its strategic reserve and called on oil companies to increase drilling, as US President Joe Biden moved to control soaring petrol costs. West Texas Intermediate fell below $100.
Investors were also eyeing US non-farm payrolls, with forecasts of 470,000 added in March, compared with 678000 in February.
On the European economic front, eurozone inflation surged to a record 7.5% in March amid rising energy prices, according to preliminary data released by Eurostat.
Annual inflation increased from 5.9%, coming in well above the 6.6% expected and driven by rising energy and food prices. Energy inflation jumped to 44.7% in March from 32% the month before, while food, alcohol and tobacco inflation rose to 5% from 4.2%.
There was further bleak news as eurozone manufacturing growth eased to a 14-month low in March as rising inflation and geopolitical tensions took their toll.
S&P’s Global/CIPS manufacturing purchasing managers’ index for the region fell to 56.5 from 58.2 in February. Still, it remained above the 50.0 mark that separates contraction from expansion.
In equity news, French catering and food services group Sodexo slumped 9% on narrowing its full-year revenue growth forecast, citing uncertainties due to Covid-19 and the war in Ukraine.
