European shares bounce as battered miners rise, ECB loan repayments eyed
Banks were up 1.3% ahead of the ECB's announcement expected at 1105 GMT. "The impact of this withdrawal in support will not be felt evenly across the euro-zone banking industry," said Stuart Cole, chief macro economist at Equiti Capital in London.
European shares rose on Friday after two straight sessions of declines, as investors snapped up beaten-down miners, though gains were limited by hawkish comments from more U.S. Federal Reserve officials.
The pan-European STOXX 600 index rose 0.9%, with basic resources stocks up 1.2% after falling more than 3% in the last two sessions. The European Central Bank gears up to start the biggest withdrawal of cash from the euro zone's banking system in its history, with banks expected to repay about 500 bln euros in TLTRO loans. Banks were up 1.3% ahead of the ECB's announcement expected at 1105 GMT.
"The impact of this withdrawal in support will not be felt evenly across the euro-zone banking industry," said Stuart Cole, chief macro economist at Equiti Capital in London. "We can expect most of the expected repayments to come from banks in the more fiscally prudent northern member states, and it will be the likes of Italian banks and those in other southern peripheral countries that will face the most distress in paying back and replacing these funds."
Rate-sensitive tech stocks were down 0.3% after St. Louis Fed President James Bullard said interest rates might need to hit between 5.00% and 5.25% from the current level of just below 4.00% to be "sufficiently restrictive" to curb inflation. The STOXX 600 has gained about 4.9% so far this month, driven by better-than-feared earnings and expectations of smaller rate increases by the Fed.
Even as data pointed to the euro zone heading into a recession, markets are starting to price in a bottoming of the bleak economic readings for the region. Among individual stocks, Austrian hydropower producer Verbund jumped 8.2% to top the STOXX 600, while energy and environmental services provider EVN gained 5.2%.
The Austrian government said it plans temporary windfall tax of up to 40% for oil and gas firms and power companies, while noting that the levies can be reduced to 33% if the companies make green investments. Teleperformance shares rose 4.8% to the top of France's CAC 40, after the French office support technology company announced its exit from the "highly egregious" part of trust and safety business.
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