ECB weighs increasing rates to record high
Auto stocks fall after China warns EV probe will hurt ties
STOXX 600 up 0.1%
(Updated at 0805 GMT)
By Bansari Mayur Kamdar
Sept 14 (Reuters) – European shares inched higher on Thursday, with investors cautious ahead of the European Central Bank’s rate decision where it is likely to raise interest rates for a tenth consecutive time.
Markets are now pricing in a 65% chance of a 25-basis-point hike that could take Europe’s key interest rate to a record peak, up from around a 40% chance on Monday.
Analysts and investors had been leaning towards a pause in the ECB’s rate hike until Reuters reported on Tuesday that the central bank was set to raise its forecast for inflation next year to more than 3%.
“The morose economic outlook brings investors to think that even if the ECB hikes today, it will certainly be the last one, and that in less than a year from now, we will be talking about the first rate cut in Europe due to economic weakness,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The pan-European STOXX 600 inched 0.1% higher by 0805 GMT, supported by healthcare and commodity-linked stocks.
The energy index gained 1%, tracking a recovery in crude prices, while miners added 1.7% on firmer metal markets.
Neste climbed 3.1% as Goldman Sachs raised the Finnish oil refiner and biofuels producer’s stock rating to “buy”.
A European Commission investigation into Chinese electric vehicles believed to have benefited from state subsidies will have a “negative” impact on economic and trade ties, China’s commerce ministry warned.
Leading sectoral losses, the STOXX Europe 600 auto index declined 1.1%, with Germany’s Mercedes, BMW and Volkswagen and France’s Renault falling between 1.1% and 1.9%.
Shares of Deliveroo rose 5.5% after activist-investor Sachem Capital said in a report that it believes the food delivery company could become a takeover target.
THG slumped nearly 16% after the British e-commerce firm forecast its annual revenue from continuing operations to come in flat or drop up to 5%.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Sherry Jacob-Phillips)