European stocks rebound at the open on Wednesday, after the European Central Bank said its rate-setting Governing Council would hold an unscheduled meeting to discuss the recent sell-off in government bond markets.
The pan-European Stoxx 600 index was up 0.41% in early deals. Italian bank stocks rallied after declines in recent days over concerns about the Italian government’s rising debt costs.
Shares in Unicredit, Intesa Sanpaolo, Banco BPM, FinecoBank and BPER Banca were all higher.
Investors are also jittery about the next move from the US Federal Reserve as inflation continues to surge.
“Expectations have risen that policymakers at the US central bank will slam on the brakes hard with a 0.75% hike, to stop prices spiralling out of control,” said Hargreaves Lansdown analyst Susannah Streeter.
“The worry persists that a more aggressive attitude by the Federal Reserve will see growth go into reverse and could set off a slow motion crash into recession, with troublesome repercussions for global growth. The red warning lights have begun flashing after the closely watched US government bond yield curve briefly inverted yesterday.”
“The yields on two-year Treasuries rose above 10-year borrowing costs – a development which has regularly signalled a coming recession. The curve is still worryingly flat, with the yield on two-year Treasuries at around 3.35% and 10-year bonds only a nudge above with a yield of 3.40%.”
In other equity news, shares in UK-listed retailer WH Smith were up as the company forecast annual earnings at the upper end of expectations.
Shares in Swedish medical equipment maker Getinge fell after the company lowered its outlook.
