European shares were slightly off morning highs on Monday as a positive close on Wall Street on Friday and the easing of Covid-19 restrictions in China lifted sentiment.
The pan-regional Stoxx 600 was up 0.67% with all major bourses higher.
“Friday’s rip had all the hallmarks of a bear market rally and does not inspire confidence that the bottom is finally in. Nevertheless, we could see further upside if inflation data this week points to slowing – the market would then start to find confidence that the Fed has got control of the situation,” said Markets.com analyst Neil Wilson.
“The quicker the Fed gets control, the swifter the end to the hiking cycle and earlier it will start to ease…what this rosy scenario ignores is just how long inflation lingers – plateau rather peak – and just how much earnings will come down in the meantime. Atlanta Fed GDPNow is updated today – expect to signal technical recession.”
Commodities rebounded as fears that the Chinese economy could go slowdown receded, which in turn lifted mining stocks. Rio Tinto, Glencore, Antofagasta and Anglo American all sharply higher.
Elsewhere, consumer goods and healthcare company PZ Cussons rose after saying it expected annual group revenue of around £590m with like-for-like growth of 3%. The maker of Imperial Leather soap said growth was driven by price/mix as it maintained full-year profits guidance.
In equity news, tech investor Prosus surged by 16% after it said it would gradually sell down its 28.9% stake in Chinese software giant Tencent, owner of WeChat, worth more than $100bn at current prices.
Intesa Sanpaolo shares rose after Italy’s biggest bank halved its share buyback programme for this year to €1.7bn.
