By Sruthi Shankar
(Reuters) -European stocks edged higher on Monday after a sharp selloff last week on recession worries, while French shares lagged its peers after President Emmanuel Macron lost an absolute majority in the country’s parliamentary election.
The pan-European STOXX 600 index rose 0.4%, with battered banking, travel and retail stocks leading the gains. A U.S. holiday also likely made for choppy trading.
The benchmark shed 4.6% last week in a global sell-off that was fuelled by worries about aggressive interest rate hikes by the Federal Reserve and other major central banks sparking a recession.
France’s blue-chip CAC 40 rose 0.1%, lagging other major regional indexes, after Macron’s centrist Ensemble coalition secured the most seats in the National Assembly over the weekend but fell well short of securing an absolute majority needed to control parliament.
The country’s major banks, including Societe Generale, BNP Paribas and Credit Agricole, all slipped in morning trade.
“It will mean that there will probably be less structural reforms but we’re already underweight Europe and it does not significantly change our stance,” said Willem Sels, global chief investment officer, Private Banking and Wealth Management at HSBC.
The STOXX 600 has shed almost 17% this year so far, as a cocktail of worries from soaring inflation to China’s slowing economy and cost-of-living crisis in the UK dampen risk appetite.
“It’s difficult to say whether or not we’ve achieved a bottom. We’ll continue to see some volatility because inflation, in our view, is not going to start to come down until the end of this year,” Sels added.
Data showed German producer prices surged by a more-than-expected 33.6% in May, on a year-on-year basis.
Europe’s construction and materials index dropped 2.1% after Irish building insulation specialist Kingspan said it had seen the mood in most end markets deteriorate over the last two months.
Kingspan’s shares tumbled 12.9%, while Danish peer Rockwool and France’s Saint-Gobain fell more than 5%.
French carmaker Renault jumped 5.7% after Jefferies upgraded the stock to “Buy”.
Valneva surged 17.2% after U.S. healthcare giant Pfizer agreed to invest 90.5 million euros ($95.24 million) to buy an 8.1% stake in the French vaccine company.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)