By Sruthi Shankar
(Reuters) – Europe’s main stocks index bounced off 9-month lows on Friday following a late rally on Wall Street as investors hunted for bargains after a bruising sell-off this week as Russia invaded Ukraine.
The pan-European STOXX 600 index rose 0.6% after sliding to its lowest since May 2021 in the previous session. The benchmark was on course to end the week with losses of over 4%.
In a dramatic market reversal, U.S. stocks closed higher on Thursday as U.S. President Joe Biden unveiled harsh new sanctions against Russia, with some analysts saying the measures were not as harsh as feared.
The market mood, however, remained fragile as U.S. stocks futures dipped, pointing to a weak open on Wall Street.
Missiles pounded Kyiv on Friday as Russian forces pressed their advance and Ukrainian President Volodymyr Zelenskiy pleaded with the international community to do more, saying sanctions announced so far were not enough.
“I expect visibility to remain low and it remains to be seen whether risk appetite might really extend ahead of the weekend,” Christian Stocker, equity strategist at UniCredit, said.
“However, from a valuation perspective there is a good likelihood that stock markets have reached a tradeable bottom,” Stocker said, adding that the euro zone blue-chip index is finding some technical support between 3,800 and 4,000 levels.
The STOXX 600 is off nearly 13% from its January peak after Thursday’s sell-off sent it into correction territory, or 10% or more declines from the index’s record highs.
Defensive sectors such as utilities and real estate led European gains, while chemical stocks slipped 0.6%.
With oil and gas prices soaring in the wake of the Ukraine crisis, investors fear inflation will run even hotter and disrupt economic recovery in the euro zone due to its heavy reliance on Russia for gas supplies.
European Central Bank policymakers met in Paris on Thursday. ECB President Christine Lagarde is due to hold a news conference later on Friday.
Goldman Sachs cut its 12-month target for STOXX 600 to 490 from 530, citing risks from the Ukraine crisis.
Porsche SE and Volkswagen gained 3.6% and 2.2% respectively after the carmakers fleshed out details of a possible Porsche listing.
Swiss Re fell 5.9% as the reinsurance company swung to a smaller-than-expected full-year profit in 2021.
German chemicals giant BASF slid 4.2% after it forecast lower 2022 operating earnings due to slower economic growth.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta)
