European stocks stage cautious rebound on mining boost, earnings cheer (updated)

Mid Penn Bancorp

07/02/2022 09:41

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    * STOXX recovers after five weeks in negative territory
    * Miners rise as iron ore futures jump on demand hopes
    * German Dec. industrial output falls 0.3% versus est. 0.4%
rise

 (Adds comment, updates prices)
    By Anisha Sircar
    Feb 7 (Reuters) - European shares rose on Monday after five
straight weeks of declines, as gains in mining stocks and
positive earnings reports outweighed worries of a looming policy
tightening cycle and geopolitical tensions.
    The pan-European STOXX 600  .STOXX  ticked up 0.2% after
losing 0.7% last week. 
    The STOXX 600 has dipped 5% so far in 2022, weighed down by
a 15% decline in tech stocks  .SX8P , as hawkish central banks
amid broadening inflationary pressures, geopolitical concerns
and energy supply fears dominate market sentiment. 
    "(The European Central Bank) could, after all, decide to
lift rates in 2022. Prior remarks by (ECB President Christine)
Lagarde and her colleagues highlighted no lift-offs this year,
but now that door is open," said Charalambos Pissouros, head of
research at JFD Group.
    Expectations of higher rates hurt equities as this means
higher borrowing costs and lower present values, especially for
high-growth firms which are usually valued by discounting future
cash flows, Pissouros said.
    Klaas Knot, the Dutch Central Bank president and a member of
the ECB's governing council, said on Sunday he expected the ECB
to raise rates in the fourth quarter of 2022.  urn:newsml:reuters.com:*:nL1N2UH05R
    On Monday, Germany's two-year government bond yield
 .DE2YT=RR  rose to its highest in nearly seven years.
    Meanwhile, German industrial production dipped in December
as supply chain bottlenecks and a drop in construction hampered
Europe's largest economy at the end of last year.  urn:newsml:reuters.com:*:nL8N2UI17V
    On Sunday, White House national security adviser Jake
Sullivan warned that Russian President Vladimir Putin could
order an attack on Ukraine within days or weeks, as Washington
and its European allies continued efforts to offer Putin a
diplomatic way out of the crisis.  urn:newsml:reuters.com:*:nL1N2UH0EP
    "Bearing in mind the rising geopolitical tensions in
Ukraine, we cannot rule out volatile market swings," Pissouros
said.
    Miners  .SXPP  rose 1.4% after aluminium prices in China
leapt 3%, bolstered by supply concerns and expectations of
strong demand, while Chinese steel and iron ore futures jumped
after the state planner called for faster infrastructure
construction.  IRN   MET/L 
    Aurubis AG  NAFG.DE , Europe's largest copper producer,
firmed 3.6% after confirming an 85% rise in quarterly profit and
reiterating higher full-year earnings estimates on solid metal
prices and output.  urn:newsml:reuters.com:*:nL8N2UI0QO
    French automotive group Faurecia  EPED.PA  advanced 2.5%
after saying it would aim for sales of above 33 billion euros
($37.72 billion) in 2025, at an operating profit margin of more
than 8.5%.  urn:newsml:reuters.com:*:nL8N2UI15R
    

 (Reporting by Anisha Sircar in Bengaluru; Editing by Subhranshu
Sahu)
 ((Anisha.Sircar@thomsonreuters.com;))