Europe’s STOXX 600 rises ahead of key data, ECB minutes

By Devik Jain

(Reuters) -Europe’s STOXX 600 index on Thursday resumed its march higher after a dip in the previous session, with investors awaiting more economic data and minutes of the European Central Bank’s September meeting for clues on the pace and path of rate hikes.

The pan-European stock index was up 0.6% by 0809 GMT, tracking a late-day rally in Wall Street. [.N]

As of last close, the region-wide index is up 2.85% for the newly commenced quarter — compared with previous quarter’s sharp selloff — due to expectations of less-severe policies by central banks amid mixed set of data from the United States and Europe.

All eyes are now on Euro zone construction activity for September, retail sales data for August, and accounts from the ECB’s September meeting — all due later in the day.

The central bank had raised its key rates by 75 basis points at its latest meeting and promised further hikes even as the bloc headed towards a winter recession and gas rationing.

“It was surprising to see that the (Sept) decision was unanimous, therefore markets will want to understand why the doves of the Governing Council supported the bold rate move despite having publicly argued against large hikes at a time of exceptionally high uncertainty,” UniCredit strategists wrote in a note.

“At the moment, whatever high-frequency business or consumer sentiment surveys and market-based inflation readings indicate, there needs to be a clear decline in realized inflation figures before hopes of a pivot in central bank rhetoric are justified.”

Later this week, U.S. non-farm payrolls report will also be on investors’ radar to gauge the Federal Reserve’s stance on its ultra-hawkish approach.

Risk assets have taken a hit this year as central banks globally undertake monetary tightening to tame surging inflation – which hit a record 10% in Euro zone last month.

Travel and leisure and retailers rose 1.3% each on Thursday, led by 5.4% gain in online fashion retailer Zalando SE and 4.8% in holiday group TUI.

London’s blue-chip FTSE 100 rose 0.3% on boost from a 4.7% jump in shares of Imperial Brands after the tobacco company announced a 1 billion pounds ($1.13 billion) share buyback programme and said FY22 trading was in line with expectations.

Credit Suisse Group AG rose 1.8% after JP Morgan upgraded the Swiss Bank’s stock to “neutral” from “underweight”.

Shell fell 3.4% after the oil major said its third-quarter profits will be weakened by a sharp drop in refining margins and “significantly” weaker earnings from natural gas trading.

($1 = 0.8847 pounds)

(Reporting by Devik Jain in Bengaluru; editing by Uttaresh.V)