Europe open: Shares up as Powell speech soothes rate fears

European shares opened strongly on Wednesday, taking their cue from a rally on Wall Street after less-hawkish-than anticipated comments from US Federal Reserve chief Jerome Powell.

The pan-regional Stoxx 600 index was up 0.68% at 0820 GMT with all regional bourses higher. Markets had been jittery after a hot US jobs report last week stoked fears of more inflation and an extended run of interest rate rises.

"Investors appear a little relieved at Powell sticking to last week's script despite Friday's jobs report indicating that the labour market remains red hot. It would appear traders had become a little more defensive on the expectation of a hawkish shift but Powell refrained from taking the leap," said OANDA analyst Craig Erlam

"And credit to him for doing so. The central bank, like others, has long talked about one data point not making a trend and while there are causes for concern in last week's jobs report, it's not a game changer. Wages are still heading in the right direction, and participation also improved."

"That said, we are getting a consistent message from policymakers across various central banks. While headline inflation is falling and will likely fall much further, core services inflation remains a big concern, and tight labour markets make achieving lower wage growth consistent with 2% inflation targets very difficult."

In equity news, shares in AP Moller-Maersk fell as the shipping giant forecast a plunge in profits and warned of a global trade contraction as the boom in container traffic, sparked by the shortages created after the Covid pandemic, looked over.

Packaging group Smurfit Kappa fell despite lifting its dividend and reporting a rise in annual earnings. Shares in sector peer Mondi also declined.

French bank Societe Generale was down after posting a higher-than-expected quarterly profit on Wednesday, but set aside more money for bad loans.

Jewellery maker Pandora shone as it reported fourth-quarter results at the high-end of guidance.