By Shubham Batra
(Reuters) -European shares fell on Tuesday as markets opened after the Labour Day weekend, with a drag in oil and gas stocks offsetting gains from banking shares.
The pan-European STOXX 600 index fell 0.3%, with oil and gas shares dropping 1.6%, tracking oil prices lower on weak economic data from China and expectations of a U.S.
interest rate hike.
BP Plc dropped 5.2%, after the company pared a share buyback plan but made a $5 billion profit in the first quarter of 2023, up from the previous three months.
Bank and technology shares led gains on the index, rising 1.1% and 0.9%, respectively.
HSBC Holdings Plc jumped 5.7% on better-than-expected quarterly profit.
The Fed is expected to hike rates by 25 basis points (bps) on Wednesday, a day before a rate decision from European Central Bank (ECB).
But investors would focus on whether the U.S. central bank indicates a pause in rate hikes after May.
“We’ve had a raft of ECB officials say there remains a long way to go before the central bank would even start to consider a pause in its rate hiking cycle,” said Michael Hewson, chief market analyst at CMC Markets UK.
“A strong core CPI print today could prompt a continued aggressive approach, with expectations that we could stay at a record high of 5.7%.”
Euro zone’s preliminary inflation data, due at 0900 GMT, is expected to show a slight uptick in the pace of rise in consumer prices on a yearly basis in April to 7.0%, compared to a 6.9% rise a month ago, according to a Reuters poll of economists.
Bank lending to euro zone companies and households slowed again in March as higher interest rates and an uncertain economic outlook appeared to put a dampener on credit, ECB data showed.
Persimmon Plc led gains on the index, rising 6.2% after mortgage lender Nationwide said British house prices increased 0.5% in April for the first time in eight months.
Electrolux AB climbed 4.3% after a Bloomberg report of an approach from China’s Midea Group for a potential acquisition of the Swedish brand.
Pearson Plc was the biggest loser, falling 6.5% after U.S.
peer Chegg forecast an unexpected decline in revenue as students begin to use ChatGPT.
(Reporting by Shubham Batra in Bengaluru; Editing by Varun H K and Rashmi Aich)
