European shares end volatile session higher, inflation concerns limit gains 

[BENGALURU] European shares ended Monday’s (May 18) volatile session higher, bouncing back from declines in the previous week, as investors weighed developments in the Middle East amid rising concern over oil price-driven inflation and its impact on global economic growth.

The pan-European STOXX 600 finished up 0.5 per cent at 610.17 points, recovering from a nearly 0.9 per cent drop earlier in the session. The index logged its first weekly decline since mid-April on Friday. Despite the day’s gains, a stalemate between the US and Iran and the continued closure of the vital Strait of Hormuz left investors worried about the scale and scope of energy-induced inflation pressures and their effect on global economic growth.

Bets that central banks would soon hike interest rates led traders to sell bonds. In Europe, Germany’s benchmark 10-year bond yield hit a 15-year peak, with interest rate futures hinting that the European Central Bank could raise borrowing rates by at least 50 basis points by the end of the year.

European and world bond yields are increasing “due to rising inflation expectations, because energy prices have started to bite and we do not have any material progress in the Strait of Hormuz,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

“Given that the world’s oil reserves are plunging, we know that we are facing scarcity in the coming months.” Markets also weighed a report saying the US had accepted a temporary waiving of sanctions on Iranian crude, even as Teheran sent a new peace proposal with terms that appeared similar to offers that Washington had previously rejected, although an official said the US has softened its stance on some issues.

The media index led sectoral gains with a 2.5 per cent rise. Publicis added 6 per cent after the advertising group agreed to acquire US data collaboration company LiveRamp in an all-cash deal of about US$2.2 billion.

SEE ALSO

Stoxx 600 logs weekly losses on Iran war-linked inflation woes

European shares slip as inflation worries keep investors on edge

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Germany’s DAX index led gains among regional bourses, with Deutsche Boerse up 4.6 per cent after the stock exchange operator said it welcomed investor TCI taking a stake, a move that marks the hedge fund’s return as a large investor in the company.

Commerzbank ended 1.5 per cent lower after the lender formally rejected an offer by Italy’s UniCredit. Ryanair ended nearly 5 per cent higher after posting a record annual profit and saying the risk of jet fuel shortages has all but disappeared.

However, the airline warned that consumer anxiety amid the war was likely to wipe out any growth in the peak summer months. Sonova rose 7.9 per cent after the world’s biggest hearing-aid maker forecast higher annual sales and earnings. REUTERS