By Nikhil Sharma
(Reuters) -European shares edged up to a near three-month high on Monday, supported by banks and travel stocks, as investors braced for Donald Trump to be sworn in as U.S. president.
The pan-European STOXX 600 was up 0.1% as of 0952 GMT, after adding more than 2% over the last week.
U.S. stock markets were closed for Martin Luther King Day, keeping trading volumes lighter than usual.
Donald Trump will be sworn in as U.S. president at 12:00 pm ET (1700 GMT) in a highly anticipated global event, with investors’ focus on the raft of executive actions concerning immigration, energy and tariffs that he has pledged to sign on day one.
“Nobody really knows what he will be willing to do and how far he will be going,” said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.
“European equities are now undecided between the global optimism and soft financial condition expectations as well as the Trump risk.”
Investors have lately been on the edge as they believe Trump’s protectionist policies, including trade tariffs on key trading partners, can prove to be inflationary for the U.S. as well as Europe.
“There is the hope that Trump is coming on the scene with a first punch and he’s going to soften his tone and his next four years won’t look as bad,” Ozkardeskaya said.
The banking index added 0.7%, the most among all sectors, followed by a 0.4% gain for the travel & leisure index. Utilities fell 1.1% to limit overall gains.
Meanwhile, German producer prices rose less than expected in December, increasing by 0.8% on the year.
European Central Bank policymaker Robert Holzmann warned the central bank could hurt its credibility if it cuts interest rates when inflation rises faster than anticipated, even temporarily.
The ECB is widely anticipated to trim rates by a quarter point at its next policy meeting on Jan. 30.
The annual gathering of the world’s political, business and financial leaders at the World Economic Forum (WEF) in the Swiss town of Davos is another key event this week.
Among stocks, industrial technology group Hexagon advanced 1.3% after it appointed Anders Svensson as CEO. Svensson will move from engineering group Konecranes, whose shares slipped 4%, where he served as CEO.
Siemens Energy dropped 2.1%, with traders pointing to a downgrade by UBS to “sell.”
Belimo Holding advanced 2.8% after the Swiss heating and ventilation solutions maker reported full-year revenue above market expectations.
(Reporting by Nikhil Sharma in Bengaluru; Editing by Savio D’Souza)
