- STOXX extends gains to third straight session
- German consumer sentiment hits lowest since Feb 2021
- Barclays slumps on stake offload
- All major STOXX sectors rise
March 29 (Reuters) - European shares rallied to five-week highs on Tuesday, taking cues from strength in Asian markets and on Wall Street overnight, with investors eyeing peace talks between Moscow and Kyiv scheduled to be held in Turkey.
The pan-European STOXX 600 index climbed 1.2%, extending gains to a third straight session, as a sell-off in bonds continued.
All major sectors were in the positive territory, led by automakers and energy stocks. Banks rose 1.1% and were among the biggest boosts to STOXX 600.
In the first direct talks between the two sides in more than two weeks, Ukrainian and Russian negotiators prepared to meet in Turkey, as Moscow's invasion appeared to have stalled on several fronts. Hopes for a breakthrough, however, are limited.
"Suggestions the Russian side are softening some of their previous demands raised spirits, but the market is unlikely to take anything for granted when it comes to the machinations of Vladimir Putin," said AJ Bell investment director Russ Mould.
Investor focus is also on oil and gas supplies after Russia said it would accept payments for its gas exports in roubles. Russian gas accounts for about 40% of Europe's total consumption and the move could exacerbate a crunch in the continent and fan inflation.
Gains in London's FTSE 100 were curbed by a 4% slide in lender Barclays after one of its top investors offloaded stock roughly equivalent to a 3% stake in the bank.
STOXX 600 is on course to end March with small gains - its first month in the black this year. But the index is on course for its first quarterly loss in eight, as worries over broadening inflation given the surge in commodity prices, as the subsequent hit to economic growth keep risk appetite in check.
German consumer morale looks set to slump heading into April as the war in Ukraine pushed households' economic and income expectations to new record lows since the 2009 financial crisis, a survey by the GfK institute showed on Tuesday.
"The resilience of global stocks ... is truly impressive but this stoicism is likely to face continuing tests as the impact of mounting prices and the actions of central banks continue to feed through, not to mention the ongoing geopolitical concerns," Mould said.
Shares of Maersk slipped 1.3% after the Danish shipper said the Shanghai lockdown will severely hurt trucking services and increase transport costs, as China's intensifying efforts to fight the spread of COVID-19 further rattles global supply chains.
Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V and Sherry Jacob-Phillips
Source: Reuters