UPDATE 1-Media, travel stocks lift European shares after two days of declines

Reuters · 05/11/2023 09:18
UPDATE 1-Media, travel stocks lift European shares after two days of declines

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Euro zone consumers raise inflation expectations

Bayer slides after weak outlook

BoE set to hike rates later

Adds analyst comment in paragraph 4, updates prices throughout

- European shares rose on Thursday led by the gains in media and travel stocks, as signs of easing U.S. inflation boosted hopes that the Federal Reserve might soon pause its aggressive interest rate hikes.

The pan-European STOXX 600 index .STOXX climbed 0.4% after two consecutive sessions of losses.

The tech-heavy Nasdaq touched a more than eight-month high on Wednesday, boosted by a slightly lower-than-expected increase in April inflation that spurred hopes of the Fed pausing its rate-hike cycle in June.

"While inflation is trending in the right direction, we still see potential for disappointment among equity investors on the pace of Fed easing in the remainder of this year," Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a .

The STOXX 600 has been rangebound in the recent weeks, as investors weigh the outlook for U.S. and European monetary policies as well as potential for a U.S. recession in the wake of aggressive rate hikes and the recent banking turmoil.

Euro zone consumers raised their inflation expectations in March, even as the rate of price growth fell and the European Central Bank (ECB) kept raising interest rates, an ECB survey showed.

The ECB is expected to keep hiking interest rates. ECB Governing Council member Joachim Nagel told Bloomberg TV in an interview that "there's off the table" when asked if interest rates will still be rising in September.

UK's FTSE 100 index .FTSE edged up ahead of the Bank of England's monetary policy decision, where the central bank is expected to go for a 12th consecutive interest rate increase.

ING Groep INGA.AS jumped 3.8% after the largest Dutch bank reported a better-than-expected first-quarter profit and announced a share buyback programme of up to 1.5 billion euros ($1.65 billion).

Norwegian salmon farmer SalMar SALM.OL jumped 7.7% after its first-quarter results.

Bayer BAYGn.DE slid 7.0% as the German diversified group forecast its 2023 results to be at the lower end of its target range.

Miners .SXPP and automakers .SXAP led declines among the European sectors, with several companies including Volkswagen VOWG_p.DE trading ex-dividend.

Sentiment was also hurt by a drop in metal prices, including copper, after subdued trade data from top consumer China darkened the economic outlook for the country.

Europe's largest copper producer Aurubis AG NAFG.DE and German conglomerate Thyssenkrupp TKAG.DE slid more than 3%, each despite upgrading their forecasts.

($1 = 0.9084 euros)

(Reporting by Sruthi Shankar in Bengaluru; Editing by Dhanya Ann Thoppil and Rashmi Aich)

((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6182 2787;))