European stocks end six-day losing streak in rocky session

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  • STOXX 600 rebounds from lows hit after US inflation data
  • US consumer prices rise more than expected in September
  • Financials boosted the STOXX index the most
  • Chipmakers reverse losses

Oct 13 (Reuters) – European stocks soared on Thursday, rebounding from a nearly two-year low reached earlier in the session after U.S. inflation data boosted bets on aggressive interest rate hikes from the Federal Reserve.

The regional STOXX 600 index (.STOXX) shuttled between positive and negative territory throughout the session before closing up 0.9% and snapping a six-day losing streak.

Data showed U.S. consumer prices rose more than expected in September, bolstering the case for a fourth consecutive 75 basis point rate hike by the Fed next month.

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“The fact that (stocks) rebounded and rebounded as strongly as they did suggests that this was more of a technical buy than a fundamental decision,” said market analyst Craig Erlam. senior at Oanda.

The STOXX 600 had fallen 4.3% in the previous six sessions as markets worried about aggressive policy moves by central banks to rein in soaring prices and recent warnings from the International Monetary Fund and World Bank of a recession.

“We’ve seen bearish buyers come back and test this theory that maybe this is a bottom for the market. I don’t know if it’s going to pay off because it really isn’t the kind inflation report that the market wanted to see,” Erlam said.

Stock markets were buoyed earlier in the day following reports that the UK government was considering changes to the budget plan announced last month that sparked a rout in bond markets.

Investors are now watching third-quarter earnings reports closely to see how companies are handling cost pressures and to gauge corporate guidance amid growing recession fears.

“It (the rebound) may be that investors are waiting to see what happens with earnings,” said Shawn Cruz, chief strategist at TD Ameritrade in Chicago, Illinois.

“Two companies with very large footprints in the consumer landscape came out and reported upbeat forecasts and are doing well,” Cruz said, referring to upbeat results from Domino’s Pizza (DPZ.N) and Walgreens Boots. Alliance (WBA.O) on Thursday. .

Among STOXX sectors, financials (.SXFP) were the biggest gainer in the index, while tech stocks (.SX8P) hit their lowest level since May 2020 earlier in the session and rose by 0.3%.

Gains in energy (.SXEP) and industrials also boosted the index.

Chipmakers including Infineon (IFXGn.DE) and ASML (ASML.AS) also reversed session losses to gain between 0.9% and 3%.

Norwegian aluminum producer Norsk Hydro (NHY.OL) jumped 6.7% after reports that the United States was considering restricting imports of Russian aluminum.

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Reporting by Devik Jain and Amruta Khandekar in Bengaluru; additional reporting by Sinéad Carew; edited by Uttaresh.V, Neha Arora, Shinjini Ganguli and Andrew Heavens

Our standards: The Thomson Reuters Trust Principles.

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