© Reuters. FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 1, 2022. REUTERS/Staff
By Sruthi Shankar and Bansari Mayur Kamdar
(Reuters) -European stocks reversed earlier falls to close higher on Wednesday as surging commodity prices lifted energy and mining shares on fear of supply constraints due to crippling sanctions against Russia over its invasion of Ukraine.
Miners gained 2.3% as prices of metals including copper and aluminium surged, supported by growing fears of supply disruptions. [MET/L]
“Equity markets have suffered greatly in the past few sessions, and that has presented buying opportunities, but the bulls who entered the fold today are far from aggressive,” said David Madden, market analyst at Equiti Capital.
The STOXX 600 had slumped more than 2% on Tuesday and is down about 8% this year, amid worries over the global economic impact of Western sanctions on Russia, especially surging energy prices fanning already high inflation.
Global stock markets took heart from Federal Reserve Chair Jerome Powell signaling the central bank would start raising rates this month despite uncertainties stemming from the Ukraine crisis.
Euro zone banks gained 1.4% after dropping to their lowest level in nearly 11-months.
Powell’s comments and a Bank of Canada rate hike helped banks as “the market has been reassured that central bank policy remains focussed on battling inflation, meaning interest rates will continue to be raised,” said Stuart Cole, head macro economist for Equiti Capital.
Data on Wednesday showed euro zone inflation soared to another record high last month, intensifying problems for the European Central Bank, which must convey a sense of calm amid war-related market turmoil but also respond to mounting price pressures.
Defensive names, which had seen some buying amid the hit to risk sentiment, declined on the day with utilities down 1.7%.
Carmakers lost 1.6% as they struggled to obtain crucial wire harnesses as the Russian attack has shuttered suppliers in western Ukraine, forcing them to curtail production.
Volkswagen (DE:VOWG_p) and BMW lost more than 2% each.
Ericsson (BS:ERICAs) slumped 9.7% after the Swedish telecom gear maker said it had been informed that disclosures it made to the U.S. Department of Justice about an internal investigation into conduct in Iraq were insufficient.
Finnish refiner Neste jumped 14.3% after a joint venture deal with Marathon Petroleum Corporation (NYSE:MPC), as brokers welcome added production capacity.
European stocks mark cautious gains on commodities boost
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