Europe: Travel stocks lead shares higher as airlines soar

[BENGALURU] European shares ended higher on Thursday (Jan 20) with travel stocks leading gains after Ryanair expressed confidence in a recovery this year, while bond yields retreated from recent peaks, taking some pressure off equities.

The pan-European Stoxx 600 closed up 0.5 per cent, overcoming early losses and extending a recovery into a second consecutive session.

Travel stocks were the best performing European sector, rising 2.9 per cent as airline shares jumped after Ryanair's optimistic take on travel trends in 2022.

Shares of low-cost carrier rose 4.2 per cent.

Broader European equities benefited as German bond yields dropped back below 0 per cent, retreating from a series of strong gains this week.

Utility and technology stocks rose 1.7 per cent and 1.5 per cent, respectively. The 2 sectors usually tend to underperfrom in high-rate environments, and have fallen substantially this year.

The broad Stoxx 600 index has struggled for direction this week as investors fretted over soaring inflation and eventual policy tightening this year. Positive earnings updates and commodity-linked gains, however, aided sentiment.

Data showed German producer prices rose at a record rate in December, driven by higher energy prices.

Still, European Central Bank head Christine Lagarde said inflation in the region would ease gradually over the year, given that its main drivers - surging energy prices and supply bottlenecks - were expected to subside.

"Investors are considering the best port of call in a world where money stops sloshing around, and growth stock darlings begin to look less attractive," said AJ Bell financial analyst Danni Hewson.

"With the price of oil and gas so high, and consumers under pressure, the threat of even higher prices will be making great big clanging noises in investors' ears," Hewson said.

Energy stocks retreated from near 2-year highs as crude oil prices dipped after a month-long rally.

Among other stocks, Unilever fell 0.5 per cent after it said it would not raise its £50 billion (S$91.6 billion) offer to buy GlaxoSmithKline's (GSK) consumer healthcare business, which GSK previously rejected.

GSK shares fell 1.8 per cent.

Deliveroo rose 1.4 per cent after reporting a 36 per cent year-on-year jump in the gross value of orders on its platform in the fourth quarter, and as the food delivery company hit the top of its guidance range with a 70 per cent rise for the year.

Metal-cutting tools and mining gear maker Sandvik advanced 1.3 per cent after posting quarterly earnings just above analysts' expectations and noting strong demand.

German sportswear maker Puma rose 1.2 per cent after posting stronger-than-expected preliminary quarterly sales and core profit.

REUTERS