European stocks rise as traders assess fresh virus curbs

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European stocks edged up on Monday, after closing lower in the previous session as surging Covid-19 cases led several countries in the bloc to reimpose pandemic restrictions.

Europe’s Stoxx 600 share index climbed 0.2 per cent in morning trading. The regional gauge had slipped about 0.1 per cent over the course of last week after rising in each of the previous six weeks, buoyed in part by strong corporate earnings reports helping to temper questions about high inflation.

Germany’s Dax index was flat, while the UK’s FTSE 100 rose 0.3 per cent.

Protests broke out in Austria, Italy and Brussels among other European countries over the weekend, after governments stepped up virus restrictions in response to higher numbers of infections.

Yet the stronger curbs failed to damp momentum in European equities on Monday. “The [European] market as a whole is becoming a little more vulnerable,” said Ewout van Schaick, head of multi asset at NN Investment Partners, “but it hasn’t moved so far because the fear of missing out is so big,” he said. “There is a lack of alternative.”

Futures contracts tracking Wall Street’s blue-chip S&P 500 share index rose 0.3 per cent, while those tracking the tech-heavy Nasdaq 100 index rose about 0.4 per cent. Both have climbed by more than a quarter so far this year.

Asian stock markets were mixed. Hong Kong’s Hang Seng index fell 0.4 per cent, while China’s CSI 300 index rose 0.5 per cent. Japan’s Topix gauge was broadly flat.

Meanwhile, emerging market equities were down Monday following selling pressure last week as investors increasingly shifted their attention towards developed economies where interest rates were expected to rise over the coming year.

A broad FTSE barometer of EM stocks dipped 0.8 per cent in US dollar terms, having fallen 1.4 per cent over the course of last week.

In currencies, the Euro was flat on Monday against the greenback at just under $1.13, having struck its lowest level in 16 months last week as traders bet the bloc’s central bank would stick to ultra-low borrowing costs even as US and UK policymakers were expected to raise interest rates.

The Turkish lira hovered at about TL11 to the dollar, its weakest level on record, after Turkey’s central bank cut interest rates by 1 percentage point to 15 per cent last Thursday. The currency has fallen more than 30 per cent this year as interest rates have been slashed from 19 per cent at the start of September, against a backdrop of rising inflation.