Banks and commodities stocks push European stocks higher as markets await ECB meeting

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, June 2, 2022. REUTERS/Staff

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  • China Lifts More COVID-19 Curbs; miners’ luxury stocks rise
  • British Prime Minister Johnson will face a vote of no confidence later on Monday
  • ECB decision on Thursday, US inflation on Friday
  • Increase in Melrose on sale of unit; Clontarf dives

June 6 (Reuters) – European stocks rose sharply on Monday, helped by banks and commodity-related shares, as investors kept tabs on U.S. inflation data and details of a the European Central Bank later this week.

The pan-European STOXX 600 index (.STOXX) rose 0.8% after finishing down 0.9% last week on concerns over economic growth, amid rising prices and bets on the tightening of monetary policy by the main central banks.

Banks (.SX7P), which typically appreciate in a high interest rate environment, rose 1.4% on Monday.

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Miners (.SXPP) climbed 2.0%, while luxury stocks also rallied. Both sectors are drawing significant demand from China and have increased after authorities further eased restrictions in Beijing and Shanghai.

This morning’s buying is boosted by the easing of COVID-19-related restrictions in China and strong US jobs data last week, allaying some concerns that aggressive Reserve tightening U.S. federal government will tip the U.S. economy into recession, said Stuart Cole, chief macro strategist at Equiti Capital.

London’s commodity-heavy FTSE 100 (.FTSE) jumped 1.2% after a long weekend.

British Prime Minister Boris Johnson will face a vote of confidence later on Monday, 1922 committee chairman Graham Brady has told lawmakers, after a report documented alcohol-fueled parties as the Great Britain was under strict COVID lockdowns. Read more

“The market will see Johnson lose as … allowing the government, under a new leader, to finally focus on the broader issues of the day, such as the cost of living crisis,” Cole said.

On Thursday, the European Central Bank is expected to confirm an end to bond buying this month and investors will be looking for more clues on the pace and magnitude of the increases.

Investors stepped up bets on ECB interest rate hikes this year after data last week showed eurozone inflation hit a record high. A bigger hike of 50 basis points at one of the bank’s policy meetings by October is on the cards.

Meanwhile, US inflation data due Friday is expected to show a month-on-month rise. The Fed signaled rate hikes this month and next before pausing to assess economic data. But May’s inflation data could see the money market speculating on an extended rate hike cycle.

Among other stocks, auto parts supplier Melrose Industries Plc (MRON.L) rose 4.0% after agreeing to sell its Ergotron unit for $650 million. Read more

Clontarf Energy Plc (CLON.L) fell 69.3% after Western Gas said its Sasanof-1 exploration well off Western Australia found no hydrocarbons. Clontraf is one of Western Gas’ partners in the Sasanof-1 well. Read more

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Reporting by Susan Mathew in Bengaluru; Editing by Shounak Dasgupta and Shailesh Kuber

Our standards: The Thomson Reuters Trust Principles.

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