By Avinash P
March 30 (Reuters) – European shares edged higher in choppy trading on Monday as energy stocks rose, while investors awaited inflation data from Germany, euro zone’s largest economy, that could shed light on the impact of the Middle East war on the bloc.
After a weak open, the pan-European STOXX 600 was up 0.2% at 576.55 points as of 0938 GMT, following two straight days of losses.
The European stock benchmark is down 9% so far this month and is set to log its steepest monthly fall since March 2020.
Michael Hewson, senior market analyst at iForex, expects more pain for European stocks as the conflict showed no sign of easing.
Yemen’s Iran-backed Houthi militia fired missiles at Israel over the weekend, widening the conflict and stoking fears of more disruptions to shipping lanes.
“Markets are underpricing the prospect that this outbreak of hostilities will not have a speedy conclusion,” said Hewson.
Brent crude surged above $115 per barrel on Monday, set for a record monthly leap. [O/R]
Energy heavyweights Shell and TotalEnergies added 1.3% and 1.8%, pushing their energy index <.SXEP> 1% higher.
Orsted jumped 7.6% after Bank of America upgraded the rating on its shares to “buy”, citing improving outlook for the offshore wind developer in the wake of the war.
German consumer price index and harmonised index of consumer prices data are due at 1200 GMT.
Aluminium producer Norsk Hydro jumped 8% to lead gains on the index, as supply disruption concerns lifted the price of the metal after Iran struck two of the biggest producers in the Middle East.
Rising price pressures have prompted investors to scale back bets on monetary easing, with money markets now pricing three 25-basis-point European Central Bank rate hikes by the end of 2026, LSEG data showed.
That marks a sharp repricing from earlier expectations for steady rates through this year.
French central bank chief Francois Villeroy de Galhau said on Sunday the ECB is determined to prevent any energy-driven inflation from broadening out, but it is too early to discuss dates for possible interest rate hikes.
Oil price-sensitive travel sector fell 0.9% with carriers Air France and Lufthansa declining 1.5% and 0.6%, respectively.
Among individual stocks, UK-listed shares of Rio Tinto firmed nearly 4% after the miner said operations at three of its four Pilbara iron ore port terminals have resumed after Tropical Cyclone Narelle swept through Western Australia’s Pilbara region, which helped lift London’s FTSE 100 0.8% higher.
(Reporting by Avinash P in Bengaluru; Editing by Sonia Cheema and Harikrishnan Nair)
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