UPDATE 1-Germany leads European stocks higher; ECB policy meet in focus

Reuters | Updated: 08-04-2024 15:12 IST | Created: 08-04-2024 14:43 IST
UPDATE 1-Germany leads European stocks higher; ECB policy meet in focus
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European shares edged up on Monday, led by Germany's DAX, after strong industrial production data from the region's largest economy, though caution remained ahead of the European Central Bank's policy decision later in the week. The STOXX 600 index was up 0.2% by 0845, with Germany's DAX marginally outperforming the broader continent with a 0.5% gain.

Data from the region's manufacturing powerhouse showed industrial production rose more than expected in February, helped by the performance of the construction industry. Cyclical sectors such as basic resources automobiles and industrial goods and services gained between 0.4% and 1.3%.

However, analysts stuck to a cautious tone. "As much as today's industrial data is a balm for the German economy, this is not yet the start of a significant recovery," analysts at ING bank said.

"Still, somewhat lower interest rates, anticipation of upcoming European Central Bank rate cuts, lower gas and electricity prices, and resilience of the U.S. economy should bring more relief to German industry over the coming months." Germany's 10-year government bond yield hit a two-and-a-half-week high, ahead of the ECB's monetary policy meet on Thursday, against the backdrop of global nervousness on the timing of interest rate cuts.

With traders widely expecting the central bank to stand pat on interest rates, they will scour for any hints that a first rate cut of 25 basis points could be delivered in June. The benchmark index notched its worst week on in more than two months on Friday as U.S. policymakers talked down market expectations for imminent interest rate cuts - optimism around which had driven gains among most developed markets since late 2023.

Following a blockbuster U.S. jobs report on Friday, traders now firmly see the ECB delivering its first interest rate cut before the Fed in June. Among others, Atos SE jumped 21.6%, on course for its best day since January, as Paris-based Butler Industries joined a consortium to rescue the distressed French IT consulting firm.

Believe slumped 9.7% after U.S.-based Warner Music Group said it will not submit an offer to acquire the French digital music company. Bayer lost 0.8% as a U.S. judge slashed a $1.56 billion verdict against the drugmaker to $611 million for three people who claimed its Roundup weed killer caused their cancer, by reducing punitive damages.

Zalando surged 4.9% to the top of the STOXX index after brokerage Citigroup raised the German online fashion retailer to "buy" from "neutral".

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

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