By Sruthi Shankar and Susan Mathew
(Reuters) -European equities rose for a third straight session on Tuesday, lifted by chemical and resource-linked sectors, as last week’s brutal selloff on recession fears attracted bargain hunters.
The pan-European STOXX 600 index advanced 0.4%, after hitting a more than one-year low last week.
Miners gained 1.3% after touching December 2021 lows in the previous session, while oil and gas stocks rose 1.1% as crude prices climbed on tight supply. [O/R][MET/L]
Boosting chemical stocks, French industrial gas company Air Liquide rose 3.1% after striking its largest power purchase deal with Swedish utility Vattenfall.
Among other top boosts were luxury stocks following a bullish report from Bain. The consultancy said sales of luxury goods were set to rise at least 5% this year as shoppers in the United States and Europe continued to snap up high-end watches, jewellery and shoes.
Still, growth worries lingered after an industry body warned that Germany – the region’s economic powerhouse – faces certain recession if already faltering Russian gas supplies stop completely. Italy said it would consider offering financial backing to help companies refill gas storage to avoid a deeper crisis in winter.
“With economic headwinds in the Eurozone continuing to grow, we advise investors to focus on the defensive parts of the equity market, such as healthcare, along with value sectors,” UBS said in a client note.
The European benchmark shed 4.6% last week, its worst weekly performance since early March, after interest rate hikes in the United States, Switzerland and Britain fuelled fears that aggressive tightening by major central banks would spark a recession.
The European Central Bank has reaffirmed plans to raise the ECB’s interest rates twice this summer.
“When we think of the weak equity sentiment in response to hawkish central banks and weaker growth picture, not a lot has changed from last week,” said Karim Chedid, head of investment strategy for iShares EMEA at BlackRock.
“I do question how long this reprieve can last.”
Focus will be on Federal Reserve Chairman Jerome Powell’s testimony before the Senate and the House, as well as European business activity and UK inflation data later this week.
British airline easyJet slumped 6.3% as its Spain-based cabin crew plan to go on strike for nine days to demand higher pay.
Spanish power utilities Iberdrola, Endesa and Naturgy fell about 3% each on news the country’s government was readying a new tax on electricity utilities’ profits. The broader IBEX index underperformed, down 0.6%.
(Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Subhranshu Sahu, Anil D’Silva and Sriraj Kalluvila)