Europe open: Shares higher as China holds rates; Raiffeisen slumps
European shares opened higher on Monday in what was expected to be a quiet day with US markets closed for the President's Day holiday while China's decision to hold interest rates boosted sentiment.
The pan-European Stoxx 600 index was up 0.24% at 0824 GMT with all major regional bourses higher. Britain's FTSE held on to gains above the 8,000-point mark while France's CAC was one again within touching distance of a record high.
In economic news, the People’s Bank of China left its 1-year loan prime rate unchanged for February at 3.65%. It also left its 5-year loan prime rate, a reference for mortgages, unchanged at 4.30%, widely in line with expectations.
The PBOC last week left its medium-term lending facility loans rate unchanged at 2.75% while injecting more liquidity into the banking system as corporate loan demand recovers.
On the geopolitical front, tensions between the US and China were ratcheted up as US Secretary of State Antony Blinken warned top Chinese diplomat Wang Yi of consequences should Beijing provide material support to Russia's invasion of Ukraine.
With little corporate news to drive markets, analysts are expecting thin trade.
"Volumes are set to be more muted during the sessions in Europe given that Wall Street is closed for the President’s Day holiday, so traders are likely to be searching around for a bit of a sense of direction today, looking ahead to fresh data out this week," said Hargreaves Lansdown analyst Susannah Streeter.
"The minutes of the Federal Open Market Committee due out on Wednesday will be closely watched for fresh indications about just how strong those disinflationary winds are blowing. Worries are still hanging around that US inflation will still take significant time to be whipped into a shape which will mean higher rates will have to linger for longer, sentiment which has been supporting the dollar."
"For now, it seems optimism about the recovery of demand in China is outweighing worries about a slowing US economy, with stocks on Chinese indices buoyed by the status quo decision to keep rates on hold. This has helped push up the price of crude oil, off the back of expectations that companies in China will be hungry for more energy, particularly as consumer sentiment rebounds."
In equity news shares in Raiffeisen Bank International fell sharply after the Austrian Bank had on Friday revealed it had received a request for information from the United States' sanctions authority about its business related to Russia.
Reporting by Frank Prenesti for Sharecast.com