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European stocks higher; German Ifo set to show improvement

European stock markets edged higher Monday, bouncing back from a losing week, with the focus on the German Ifo business climate index as investors seek an improvement in sentiment at the Eurozone’s dominant economy.

European equities suffered heavy losses last week, with the German DAX almost 3% lower, after the European Central Bank eased the pace of its interest rate hikes but stressed significant tightening remained ahead as it fights elevated inflation.

This promise of more interest rate hikes ahead as well as likely weak economic growth has weighed on sentiment, but the final full week of the year has started on a more positive note with investors hoping for some improvement from the German Ifo business climate index for December later in the session, in what would be the third consecutive increase.

The report comes after PMI data last week showed that the downturn in German economic activity moderated for a second straight month, indicating that a likely recession in the bloc will be shallower than previously thought.

Also of interest will be comments by ECB Vice-President Luis de Guindos in Madrid later Monday, as investors look for more clues as to the thinking of the central bank policymakers.

In corporate news, Germany is also poised to take on the risks associated with €216 billion (€1 = $1.0629) of derivatives built up by energy giant Uniper (ETR:UN01), as it moves to nationalize the company hit hard by the region’s energy crisis.

Crude oil prices rose Monday, boosted by the decision of the Biden administration to begin refilling its strategic reserves as well as hope for demand growth from China in the new year.

The U.S. government said on Friday that it will initially buy 3 million barrels of oil for its reserve, having run the Strategic Petroleum Reserve down to its lowest level in nearly 40 years in a bid to curb rising fuel prices this year.


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