# Energy stocks boost European shares ahead of ECB minutes
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-25
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: European Shares Firm on Oil Boost Despite Recession Concerns
Meta Description: Get the latest news on European shares, energy crisis concerns, and economic data impacting markets. Stay informed with Reuters.
URL: https://financedigest.com/energy-stocks-boost-european-shares-ahead-of-ecb-minuteshtml

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By Anisha Sircar

(Reuters) -European shares firmed on Thursday on a boost from oil stocks ahead of minutes from the last policy meeting of the bloc’s central bank, although gains were capped on mounting concerns of a recession induced by an energy crisis.

The pan-European STOXX 600 rose 0.6% in early trade to 434.5, eyeing its best day in more than two weeks. Gains were broad-based, with energy [shares jumping 1.1% to near 12-week highs as crude prices rose on mounting supply concerns](https://www.financedigest.com/shares-rise-but-concern-mounts-over-inflation-flare-up.html "Shares rise, but concern mounts over inflation flare-up"). \[O/R\]

[Germany’s DAX](https://www.financedigest.com/siemens-energy-to-rejoin-germanys-blue-chip-dax-hellofresh-to-exit.html "Siemens Energy to rejoin Germany’s blue-chip DAX, HelloFresh to exit") rose 0.6%. [Data showed Germany’s economy](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") expanded by 0.1% in the second quarter, beating expectations, while a separate survey showed business morale fell in August as uncertainty among companies remained high and the economy was set to shrink in the third quarter.

The benchmark STOXX index has lost about 11% this year as markets assess the impact of rapidly rising interest rates and raging inflation on [consumer spending](https://www.financedigest.com/50-of-consumers-wont-spend-more-than-20-minutes-applying-for-financial-products-online.html "50% of consumers won’t spend more than 20 minutes applying for financial products online") and company earnings amid the energy crisis.

Our year-end target for the STOXX 600 is 410, but the downside risks are growing with higher natural gas [prices and increased probability that Europe will fall](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says") into a recession,” said Sutanya Chedda, an equity strategist at UBS.

A [Reuters poll](https://www.financedigest.com/european-central-bank-to-raise-deposit-rate-to-3-25-by-mid-year-reuters-poll.html "European Central Bank to raise deposit rate to 3.25% by mid-year: Reuters poll") is indicating that the STOXX 600 may fall to 425 points by year-end.

Russia will halt natural gas supplies to Europe via [Nord Stream](https://www.financedigest.com/denmark-invites-nord-stream-operator-to-help-salvage-unidentified-object.html "Denmark invites Nord Stream operator to help salvage unidentified object") 1 for three days from Aug. 31, piling pressure on the region as it seeks to refuel ahead of winter.

Focus is also on minutes from the [ECB’s July policy meeting](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings"), where it raised interest rates by a larger-than-expected 50 basis points.

In light of significant inflation pressure, the [ECB will deliver another relatively large interest rate](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") step in September, but in October and December, we would expect the ECB to return to more moderate steps of 25 bps,” said Reinhard Cluse, chief European economist at UBS.

[Money markets](https://www.financedigest.com/explainer-why-european-money-market-funds-inflows-are-lagging-behind-the-u-s-torrent.html "Explainer-Why European money market funds inflows are lagging behind the U.S. torrent?") are now pricing in 100 bps of ECB rate hikes by October. A 50 bps [hike is fully priced](https://www.financedigest.com/investors-warn-big-consumer-firms-over-price-hikes-as-competitors-gain.html "Investors warn big consumer firms over price hikes as competitors gain") in for September, plus a small probability of a 75 bps move. \[GVD/EUR\]

Among individual stocks, [Novartis rose 0.6% on plans to spin off the Swiss group’s generics unit Sandoz](https://www.financedigest.com/novartis-names-firmenich-ceo-as-chairman-designate-of-sandoz-2.html "Novartis names Firmenich CEO as chairman designate of Sandoz").

Norwegian Air Shuttle fell 7.3% following downbeat second-quarter numbers, while Finnish utility Fortum shed 2.8% after posting a second-quarter net loss of 7.4 [billion euros](https://www.financedigest.com/europes-spend-on-energy-crisis-nears-800-billion-euros.html "Europe’s spend on energy crisis nears 800 billion euros") ($7.4 billion), hit by losses at its German subsidiary Uniper.

(Reporting by Anisha Sircar in Bengaluru; Editing by Krishna Chandra Eluri and Anil D’Silva)


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