European Stocks Close Higher On Bargain Hunting

European stocks closed higher on Monday, due largely to bargain hunting at several counters after last week’s selloff. Data showing an a significant improvement in German business confidence in December helped a bit in lifting sentiment.

Still, due to persisting worries about growth due to rising interest rates, gains in most of the markets were just modest.

Most of the markets across Europe suffered sharp losses last week as the Federal Reserve, the Bank of England, the European Central Bank and the Swiss National Bank, all raised their interest rates, and most of these banks signaled more hikes in the coming months.

Germany’s business sentiment strengthened to a four-month high in December as the economic downturn is feared to be less severe than previously estimated, results of a closely watched survey by the ifo Institute revealed.

The business climate index rose more-than-expected to 88.6 in December from 86.4 in November, data published by the Munich-based ifo Institute showed. This was also above economists’ forecast of 87.4.

The pan European Stoxx 600 climbed 0.27%. The U.K.’s FTSE 100 surged 0.4%, Germany’s DAX surged 0.36% and France’s CAC 40 advanced 0.32%, while Switzerland’s SMI edged up 0.03%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Ireland, Norway, Portugal, Spain and Turkiye closed higher.

Iceland, Netherlands, Poland and Sweden edged up marginally, while Denmark and Russia ended weak.

In the UK market Melrose Industries, Airtel Africa and BP gained 2.4 to 3.2%. Shell and CRH both ended nearly 2% up.

Smith (DS), Rolls-Royce Holdings, M&G, Coca-Cola HBC, Centrica, Admiral Group, British American Tobacco, Fresnillo, Smurfit Kappa Group, Glencore and Sainsbury (J) gained 1 to 1.8%.

Dechra Pharmaceuticals tumbled 3.8%. RightMove ended 2.75% down, and Auto Trader Group drifted down 2.36%.

JD Sports Fashion, Next, Berkeley Group Holdings, Barratt Developments and Scottish Mortgage also ended notably lower.

In Paris, Danone, TotalEnergies, Eurofins Scientific, Unibail Rodamco, Sanofi and Carrefour gained 1 to 2%.

Capgemini, Bouygues, Kering, LVMH, STMicroElectronics and BNP Paribas ended notably lower.

In the German market, E.ON, Covestro, BMW, Brenntag and HeidelbergCement gained 1.2 to 1.8%.

Volkswagen tanked more than 10%. Deutsche Post, Deutsche Wohnen, Siemens Healthineers, Continental, Puma, Zalando and Merck lost 1 to 3.2%.

Eurozone hourly labor costs increased at the slowest pace in three quarters in the September quarter, data from Eurostat showed.

Hourly labor cost eased to 2.9% annually from 3.8% in the second quarter. This was the slowest pace of increase in three quarters.

UK manufacturers reported a slight fall in orders and their production declined at the fastest pace since late 2020, the Industrial Trends Survey results from the Confederation of British Industry showed on Monday.

The order book balance fell slightly to -6% in December from -5% in November. Nonetheless, the balance was better than the long run average of -13% and also economists’ forecast of -9%.