European shares rose at the start of the week’s first session as investors continued to look for interest rate moves from central banks.
The pan-European Stoxx 600 index was up 0.56% in early deals, with all major regional bourses higher after a mixed close in Asia.
Last week, the European Central Bank kept interest rates unchanged despite record inflation levels across the euro zone, while the Bank of England lifted rates for the second time in two months – the back-to-back rises since 2004.
Despite the unchanged policy stance, the ECB signalled a possible policy “recalibration” in March.
“The shift in inflation risks to the upside prompted ECB Governing Council member Klaas Knot to comment at the weekend he expected the first interest rate rise from the ECB as early as October,” said CMC Markets analyst Michael Hewson.
“While he is acknowledged as one of the more hawkish members of the governing council, inflation in the Netherlands is still well above the EU headline rate of 5.1% at 7.6%, he is still the first governing council member to break ranks and deviate to a much more hawkish stance.”
Investors will be looking for more clues on Monday when ECB President Christine Lagarde appears before the European Parliament’s Economic and Monetary Affairs Committee.
In the UK, data from mortgage lender Halifax showed British house prices were expected to slow “considerably” over the next 12 months as households face a cost-of-living squeeze.
Meanwhile in Germany, industrial production dipped in December, according to official data, as supply chain bottlenecks and a fall in construction hampered Europe’s largest economy at the end of last year.
The Federal Statistics Office said the country’s industrial output fell by 0.3% on the month after an upwardly revised increase of 0.3% in November.
In equity news, shares in French automotive group Faurecia gained as the company said it was targeting sales of more than €33bn in 2025, at an operating profit margin of more than 8.5%.
