European shares rise in banks, commodity boost; FTSE 100 holds gains after PM resigns (updated)

Chr Hansen Holding A/S

07/07/2022 10:02

(For a Reuters live blog on U.S., UK and European stock
markets, click  LIVE/  or type LIVE/ in a news window)
    * UK PM Johnson quits, FTSE 100 rises 1% 
    * ECB debated larger interest rate hike for July - minutes 
    * Chr Hansen bottoms STOXX 600 as Q3 results disappoint

 (Updates to close)
    By Devik Jain and Susan Mathew
    July 7 (Reuters) - European shares extended a rally on
Thursday, as surging oil and metal prices lifted commodity
stocks while a jump in banks boosted Italy's main index 3.1%,
its biggest daily increase since mid-March. 
    The continent-wide STOXX 600 index  .STOXX  was up 1.9% on
broad-based gains. Miners  .SXPP  jumped 5.4% as copper rallied
from 20-month lows on hopes that demand would improve in China.
The energy sector  .SXEP  surged 4%.
 urn:newsml:reuters.com:*:nL1N2YM06P MET/L  IRONORE/  O/R 
    Banks  .SX7P  jumped 3.4%, the biggest boost to the STOXX
600. Italy's banks-heavy MIB index  .FTMIB  bounced further off
November 2020 lows hit this week. 
    Trading remained volatile, as investors wondered whether
market valuations have turned attractive after a sharp selloff
on concerns central banks could trigger a recession with
aggressive rate hikes to tame inflation.
    European Central Bank policymakers debated flagging a larger
interest rate hike for July and were keen to keep the door open
to a bigger moves in subsequent meetings, minutes of their June
meeting showed.  urn:newsml:reuters.com:*:nF9N2WY01B  
    "The key question is will inflation come down first or do we
need a recession for inflation to come down afterwards?," said
Dhaval Joshi, chief strategist at BCA Research.
    "The problem we have is if economies enter recession, then
we're going to see quite a lot of profit downgrades."
    As of Tuesday, second-quarter earnings for STOXX 600
companies are expected to climb 19.2% year-over-year. Excluding
the energy sector, earnings are expected to rise 2%, according
to Refinitiv data.   
    London's FTSE 100  .FTSE  rose 1.1% despite UK Prime
Minister Boris Johnson's resignation, as analysts said the move
was expected given several ministers from his government quit in
recent days after the latest in a series of scandals sapped
their willingness to support Johnson.  urn:newsml:reuters.com:*:nL8N2YO1BH
    "It is possible that the latest political upheaval will lead
to somewhat looser fiscal policy than otherwise (in the UK), "
said Capital Economics in a note. "The net result... will be
somewhat stronger inflationary pressures."
    "Headwinds from rising interest rates and weakening economic
growth will be a nasty combination for the FTSE 100, which we
forecast to drop by another 4% or so this year, to 6,900."
    Chipmakers STMicroelectronics  STM.PA , BE Semiconductors
 BESI.AS , ASM International  ASMI.AS  and ASML Holding
 ASML.AS  gained between 2.9% and 4.6% after Samsung Electronics
Co Ltd  005930.KS  posted its best April-June profit since 2018.
 urn:newsml:reuters.com:*:nL1N2YN2M9
    Shares of Chr Hansen  CHRH.CO  slid 9.8% to the bottom of
STOXX 600 after the Danish food ingredients maker reported
disappointing quarterly results and narrowed its organic revenue
growth target for 2021/22.  urn:newsml:reuters.com:*:nL8N2YO1PD 

 (Reporting by Devik Jain in Bengaluru; Editing by Sherry
Jacob-Phillips and David Gregorio)
 ((Devik.Jain@thomsonreuters.com;))