European Shares Close Higher as ECB Easing Looms

European shares ended Monday on a high, driven by expectations for more monetary easing by the European Central Bank. The STOXX 600 index rose 0.4%, recapturing losses from its recent drop. Key sectors like autos, retail, real estate, and utilities saw significant gains despite a downturn in eurozone business activity.

European shares closed higher on Monday, buoyed by a soft business activity reading that bolstered the case for additional monetary policy easing by the European Central Bank this year, with rate-sensitive sectors such as real estate and utilities experiencing a rise.

The pan-European STOXX 600 index advanced 0.4%, recovering some ground after its largest single-day drop since August in the prior session. The automobiles sector led the gains among major STOXX categories with a 1.9% increase, followed by retail at 1.2%.

A survey revealed that eurozone business activity contracted sharply and unexpectedly this month, with the services industry stagnating and manufacturing downturn accelerating. Fabio Balboni, a senior economist at HSBC, remarked, "Today's release was much worse than many had anticipated, suggesting a rather gloomy underlying growth picture for the eurozone." The overall downturn was widespread, with major economies like Germany and France showing contrasting trends. German shares climbed 0.7%, while French banks struggled.