European shares rose on Friday, as the European Central Bank’s (ECB) smaller rate hike, and market-beating results from Adidas AG and Apple Inc boosted sentiment.
The pan-European STOXX 600 index rose 1.08 percent to 465.31, but posted its second consecutive weekly loss, declining 0.28 percent from a week earlier.
Energy and utilities shares led the gains on the index, rising 1.4 percent and 1 percent respectively, while food and beverage shares slid 0.4 percent.
Air France-KLM SA lost 2.8 percent despite better-than-expected first-quarter revenue and robust cash flow as it benefited from a global recovery in air travel.
The ECB raised its benchmark rates by 25 basis points to 3.25 percent, the smallest increase in its rate hike cycle that started last summer, but signaled more tightening was to come.
French ECB policymaker Francois Villeroy de Galhau said earlier in the day that the ECB would continue increasing interest rates until inflation is under control.
“Inflation pressures worldwide help in driving equity markets, although we don’t like to pay higher prices, as consumers it eats into our pockets. The higher prices go to some company reaping the rewards of those higher prices,” Federated Hermes portfolio manager and senior research analyst Chi Chan said.
“As long as you’re a company that is able to pass through inflation or higher, then you’re a beneficiary, and we do see that in the latest earnings,” he said.
ECB’s Survey of Professional Forecasters on Friday showed that eurozone inflation could be lower in the coming years than previously expected, but might remain above the ECB’s 2 percent target further along.
In the UK, gains in financial and energy shares helped lift the FTSE 100.
The internationally focused index ended 0.98 percent higher at 7,778.38, a day after hitting a one-month low.
The oil and gas sector jumped 2.4 percent, tracking crude prices higher, while banks were also a big boost to the FTSE 100.
Despite Friday’s gains, the blue-chip index logged a weekly decline of 1.17 percent, with energy stocks among the top losers as US banking sector turmoil fanned recession jitters and took the shine off upbeat earnings and rate hike pause hopes.
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