By Shubham Batra
(Reuters) -European shares recouped early losses to edge higher on Thursday, supported by healthcare stocks, as investors await more economic data from the euro zone that will provide insights in the European Central Bank’s interest rate path.
The pan-European STOXX 600 index was up 0.2%, and healthcare led the gains with a nearly 1% advance.
Technology shares and miners were the top losers, falling 0.8% and 0.6%, respectively.
The mining sub-index slumped after global miner BHP Group walked away from its $49 billion plan to take over rival Anglo American.
German software company SAP led the losses for the technology sector with a 3.1% slide after a big drop in peer Salesforce, which missed Wall Street expectations due to weak client spending on its cloud and enterprise business products.
The main focus will be on the euro zone’s economic sentiment data, due at 0900 GMT, expected to see a slight improvement in May, while April’s unemployment rate due at the same time will help gauge the economic strength of the region.
German 10-year bund yields hit six-month highs earlier in the session, and were last at 2.667%, after a spike in the previous session following weak U.S. Treasury auctions and strong data that threw rate cuts in doubt.
“As markets start to price a more significant Fed rate-cutting cycle, bond yields should fall in the months ahead,” said Mark Haefele, chief investment officer, UBS Global Wealth Management.
Money markets currently see a 33 basis points of interest rate cuts by the U.S. Federal Reserve, with the first cut expected only in December, while the ECB is expected to deliver its first cut next week.
Remarks from Irish Central Bank Governor Gabriel Makhlouf and Bank of England Governor Andrew Bailey will be on investors’ radar later in the day, with key inflation readings from the U.S. and euro zone due on Friday.
Meanwhile, Spain’s European Union harmonised inflation rate accelerated more than expected to 3.8% in the 12 months through May, from 3.4% in the period through April.
Telecom Italia fell 8.1% to the bottom of the benchmark index despite posting a 3% rise in its first-quarter core profit after a strong performance from its Brazilian-listed business.
Shares of UK’s Auto Trader were the top gainers on the STOXX 600, rising 10.7%, after the car retailer trounced analysts’ profit estimate.
Banco BPM gained 2.2% as the lender ruled out a merger with rival Monte dei Paschi, and predicted a wider consolidation of the Italian banking sector would not happen before 2026.
(Reporting by Shubham Batra and Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips)
