Economy 2 MIN READ

Oil stocks lift European shares but rate-hike worries limit gains

May 26, 2022By Reuters

European shares opened slightly higher on Thursday, helped by energy stocks on the back of gains in oil prices, even though sentiment remained subdued as major central banks signaled continued policy tightening to control rising inflation.

The pan-European STOXX 600 index rose 0.2% by 0718 GMT, with energy shares up 0.8% as crude prices climbed on tight supply.

Overnight, minutes of the US Federal Reserve’s early May policy meeting showed policymakers’ belief in the strength of the economy. However, Fed policy makers agreed to continue hiking rates by 50 basis points for the next two months to tame surging prices exacerbated by the war in Ukraine.

This came after the European Central Bank’s resolve to follow suit beginning July, and left investors worried about a hit to economic growth.

While Wall Street ended higher on Wednesday, futures signaled some choppiness for Thursday. Asian shares also stumbled.

In Europe, miners, banks, and technology stocks fell between 0.1% and 0.2%.

London’s FTSE 100, heavy with mining stocks, traded flat.

Some markets in Europe, including Swiss, Sweden and Finland, were closed for a local holiday.

(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu Sahu)

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