Europe midday: Shares up on rate comments from ECB's Panetta

European shares were higher at the open on Monday ahead of another busy week of earnings and economic data, with comments from European Cerntral Bank member Fabio Panetta about future rate cuts boosting sentiment.

The pan-regional Stoxx 600 index was up 0.28% in early deals to 486 with all major bourses higher. Major Asian markets were closed for the Lunar New Year break.

Investors will have their eyes on US and UK inflation data as well as a speech from Bank of England governor Andrew Bailey for any clues on when interest rates may be cut this year.

“Investors are hanging onto every word uttered by anyone affiliated with the major central banks, looking for signs that interest rate cuts are finally on the agenda,” says Russ Mould, investment director at AJ Bell.

“Expectations that we will soon see this pivot moment have underpinned the pick-up in equity markets since late 2023 and confirmation of the first cut could give another leg-up to stocks and shares.

“The new trading week saw the spotlight on European stocks after ECB Governing Council member Fabio Panetta said the magic moment is ‘fast approaching’ for the European Central Bank to reduce rates."

“He highlighted the need to look at the pros and cons of cutting rates quickly and gradually versus waiting until later and doing it more aggressively."

“At the centre of this debate is the extent to which monetary policy decisions could increase volatility in financial markets and economic activity. Central banks ultimately want to keep volatility as low as possible.

Bailey was expected to again stress the "need to take time to scrutinise the data before making any rash moves on rate cuts", said said Hargreaves Lansdown analyst Susannah Streeter.

"UK labour market data due out on Tuesday will be closely watched given that inflation busting pay growth is still a nagging worry for policymakers, who are concerned that it risks igniting a fire under prices again.”

In equity news, Just Eat made strong gains as Deutsche Bank raised its target price on the stock.

Tui gained ahead of quarterly results this week.

Travel food outlet operator SSP Group gained after agreeing to buy Airport Retail Enterprises in Australia for an undisclosed sum.

Reporting by Frank Prenesti for Sharecast.com