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(Reuters) -European shares rebounded on Wednesday as investors picked up beaten-down stocks following a recent rout in the market that was sparked by fears about growing Western sanctions on Russia after its invasion of Ukraine.
The pan-European STOXX 600 index rose 2.6% after a four-day run of losses. Hard-hit banks, automakers and the travel and leisure sector led the gains in morning trade, with all of them rising more than 4% each.
“These stocks are beaten down, they can’t just fall further,” said Craig Erlam, senior market analyst for the UK and EMEA at OANDA. “What we’re seeing is some mild reprieve. I don’t think this is the start of a grand turnaround.”
A report https://www.bloomberg.com/news/articles/2022-03-08/eu-to-consider-massive-joint-bond-sales-to-fund-energy-defense on the European Union planning to issue bonds to finance energy and defence spending also appeared to help sentiment.
Adidas (OTC:ADDYY) jumped 8.2% after the German sportswear company said it was expecting a sales recovery in its China business but warned of a hit of up to 250 million euros ($273.10 million) from halting business in Russia.
German logistics company Deutsche Post (OTC:DPSGY) jumped 6.7% after reporting a 65% increase in 2021 operating profit.
European banks rallied 4.8% but are still off 12% for the year amid uncertainty about the European Central Bank’s policy tightening plans as well as an economic hit from the Ukraine crisis.
The ECB is set to meet on Thursday, with chief Christine Lagarde likely to prove that a lid can be kept on euro-area inflation, which has already leapt to a bigger-than-expected 5.8% – the highest figure in the bloc’s two decades.
Europe’s STOXX 600 has shed nearly 13% so far this year as the conflict in Ukraine threatens to stall an economic recovery as several countries impose sanctions against Russia, a major commodities producer.
Stock markets fell in volatile trade and oil prices jumped 4% to $127 per barrel on Tuesday after the United Stated and Britain moved to ban Russian oil imports, raising fears of global stagflation.
Russia warned earlier this week that it could reduce supplies to Germany via the Nord Stream 1 pipeline.
Italy’s second-biggest bank UniCredit gained 7.3% and French bank BNP Paribas (OTC:BNPQY) climbed 7.6%, helped by a broad-based rally, as the banks unveiled their exposure to Russia.
European suppliers of Apple (NASDAQ:AAPL) such as ASML, ams and Infineon (OTC:IFNNY) rose between 4.3% and 5.9% after Apple added 5G connectivity to its low-cost iPhone SE and iPad Air, and introduced a faster chip for a new desktop.
