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European Shares Kicks Off Week on Solid Footing

  • Associated British Foods rises on strong Primark outlook
  • Germany's Commerzbank surges to the top of DAX on comeback
  • Dechra sinks to the bottom of STOXX on FY profit warning
  • Defensive sectors track smallest gains

Feb 27 (Reuters) - Europe's STOXX 600 rose on Monday, supported by gains across all major sectors, rebounding from its worst weekly performance this year on worries of higher-for-longer U.S. and eurozone interest rates.

The blue-chip index added 0.9%. It fell 1.4% last week after hotter-than-expected U.S. inflation data fuelled bets that the Federal Reserve would continue to raise rates.

All major euro area sector indexes rose in the first hour of trading, with 1.2%-1.6% gains in the riskier parts of the market, including oil & gas, technology and autos & auto parts.

Miners, among the biggest losers last week, bounced 0.8%. Defensive sectors such as healthcare and telecoms posted the smallest gains.

European retailers rose 1.1%, led by a 3.1% increase in shares of Hennes & Mauritz. Associated British Foods climbed 1.2% as the Primark owner raised its full-year financial outlook following a strong first-half performance.

"Retail stocks have had a tremendous run after they took a hammering last year and, at the moment, it seems as if consumer spending is probably proving more resilient than markets feared," said Russ Mould, investment director at AJ Bell.

Mould highlighted that consumer spending has been buttressed by gas prices coming down and help from government-support schemes across the single-currency bloc.

Headline price pressures in the eurozone have shown signs of easing recently but the European Central Bank is still expected to hike rates in March on worries that inflation could be stickier than markets were expecting.

Nonetheless, the STOXX 600 has outperformed the S&P 500 index so far this year, boosted by recent data showing an improving economic outlook and by China's reopening.

Commerzbank celebrated its return to Germany's DAX with a 4.3% jump to the top of the blue-chip index, from which the country's No. 2 lender was removed in 2018.

Dechra Pharmaceuticals tumbled 15.5%, to the bottom of the STOXX 600, as the veterinary drugs maker warned its full-year operating profit would be at the lower end of analysts' expectations.

The final estimate of the euro area consumer confidence for February will be released later in the day.

Reporting by Shreyashi Sanyal and Johann M Cherian in Bengaluru; Editing by Dhanya Ann Thoppil and Savio D'Souza

Source: Reuters

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