Europe close: Stocks grind higher with lenders' shares pacing gains
European shares finished higher as investors digested hawkish comments from US Federal Reserve chairman Jerome Powell which proved a boon for lenders' shares.
In the latest news from Ukraine, Russian military were said to be redoubling their push on the southeastern port city of Mariupol, while in the north of Ukraine, Ukrainian forces were said to have recovered some ground in Kyiv's suburbs and retaken a small city nearby.
Earlier on Tuesday, German finance minister, Christian Lindner, tabled a proposal for a 'Marshall Plan' for Ukraine, while Volodymyr Zelensky asked Pope Francis to mediate with Moscow and Greece's foreign minister said that he would personally escort humanitarian supplies into Mariupol.
The STOXX 600 was ahead by 0.85% to 458.65. Pacing gains on that pan-European benchmark index, the sector gauge for lenders' shares climbed 2.44% on the back of Powell's remarks.
Powell on Monday said the Fed must move "expeditiously" to raise rates and possibly "more aggressively" to battle soaring inflation, after the central bank lifted rates by 25 basis points only last week.
The comments helped lift bank stocks, with Deutsche Bank, Banco de Sabadell, HSBC, Prudential, NatWest and Standard Chartered all higher.
Hargreaves Lansdown analyst Susannah Streeter said the Fed was “caught between a rock and a hard place” on rates.
“The Federal Reserve sees little option but to try and chip away inflation with even bigger interest rate hikes this year, if price pressures keep mounting. And there are very few signs of much relief given that the only way has been up for the price of oil in recent days.”
“Brent Crude trekked upwards to over $118 dollars a barrel in early trade, before losing a little ground, and that was off the back of yesterday’s 7% rally.”
“A Russian crude embargo remains in the sights of a growing number of European leaders, at a time when Russian production is already expected to be dented due to slumping demand for the country’s exports around the world. China’s reluctance to prolong mass lockdowns is also seeing downward pressure on prices evaporating.”
At last count, Brent crude was up by 0.4% at $116.13 a barrel. The UK's FTSE 100 index, which has a large number of oil majors on its list, was up 0.46%.
In other equity news, shares in Computer support and services provider Softcat rose 4% as the company said its full-year outturn was now expected to be ahead of previous estimates after interim profits grew ahead of expectations in the six months ended to January 31.
German construction software supplier Nemetschek surged 10% as the company reported a positive profits outlook.