European Markets Gain as Financials Rally, AI Fears Recede

Financial shares rallied as the STOXX 600 index marginally increased on Monday. Investor focus shifted to a busy week of earnings amid waning worries over AI impacts. The uplift in banking stocks offset declines in technology and luxury sectors, with key earnings results anticipated later this week.

The STOXX 600 index saw a modest increase on Monday, driven by gains in financial shares, as investors looked to a bustling earnings week that could reveal corporate Europe's health. The index rose by 0.13% to close at 618.52 points, with Spain's bank-heavy benchmark leading regional market gains at a 1% rise.

European stocks faced volatility in late January and early February due to concerns over artificial intelligence potentially affecting traditional businesses' profits. However, a better-than-expected earnings season, despite significant U.S. tariffs, helped the STOXX index hit a record high last week, marking its third consecutive week of gains.

Bank and insurance stocks, previously troubled by AI-related disruptions, rebounded on Monday, with banks climbing 1.4% and insurance stocks up 0.7%. Meanwhile, declines in tech and luxury shares, along with a 0.6% drop in basic materials, highlighted sector-specific challenges. Key earnings from companies like Orange, Zealand Pharma, and Airbus are awaited this week.