European shares slip on rate hike worries, rising COVID-19 cases

Investors are wary about the extent of the price tightening, but financial stocks are continuing an upbeat trend from last week as they will significantly benefit from rate increases, Streeter said. The STOXX 600 kicked off January with record highs but hit choppy ground recently as worries around inflation, COVID-19 and the central bank tightening cycle cloud the equities outlook for 2022.

European shares slipped on Monday and were on course to extend losses for a third session, as surging inflation sparked worries of more rate hikes and rising COVID-19 cases added to economic uncertainty. The pan-European STOXX 600 declined 0.1%, weighed down by real estate, tech and industrial stocks, while major global share markets eked out gains.

"Inflation is concentrating minds of investors in Europe ... which is piling the pressure on the ECB (European Central Bank) to tighten monetary policy," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. December inflation rose to a record high of 5% for the currency bloc, data showed last week.

While the U.S. jobs report for last month was seen as strong enough to keep the Federal Reserve's tightening course in place, rising energy prices may force the ECB to act to temper price growth, the central bank's board member Isabel Schnabel said Saturday. On Monday, rate-sensitive real estate stocks were down for a fifth consecutive decline, while bank stocks gained for a sixth straight day.

Credit Suisse rose 1.7% after traders cited media speculation about a possible sale or merger of the embattled Swiss bank. Investors are wary about the extent of the price tightening, but financial stocks are continuing an upbeat trend from last week as they will significantly benefit from rate increases, Streeter said.

The STOXX 600 kicked off January with record highs but hit choppy ground recently as worries around inflation, COVID-19 and the central bank tightening cycle cloud the equities outlook for 2022. Meanwhile, investor morale in the euro zone rose in January as momentum is not expected to slow down despite the new variant, a survey showed on Monday.

Carige jumped 4.0% after a report said BPER Banca , Italy's fifth-largest bank, improved its offer to prevail over rival suitor Credit Agricole Italia. BMW gained 2.9% after Goldman Sachs upgraded the German car giant to "buy" from "hold", saying the consolidation of the BMW Brilliance Automotive joint venture should result in earnings growth this year and next.

On the other hand, French diagnostics company Eurofins Scientific dipped 3.1% after Jefferies downgraded the firm to "hold" from "buy", saying COVID-19 testing has lifted the stock towards its target price. French technology consulting company Atos slumped 17.7% to the bottom of the index after issuing a profit warning that reflected customer deal delays and pressured margins at its hardware and software resales unit.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)