Stocks across Europe uncertain as relief rally fails

By mid-afternoon, the pan-European Stoxx 600 index, which had earlier declined by more than 0.6%, was roughly flat. Chemicals fell 0.7% while banks increased by 1.1%. In the previous trading day, the European blue-chip index increased by 0.8%, continuing gains seen at the close of the previous week amid generally upbeat global sentiment.

However, given the absence of fundamental drivers and ongoing worries about GDP and inflation, numerous analysts expressed doubt about the rally’s viability.

This week, all eyes will be on the European Central Bank’s policy meeting on Thursday in Frankfurt. The bank’s decision-makers have announced their intention to raise interest rates for the first time in 11 years, but they must contend with a slowing economy due to the conflict in Ukraine and the ensuing threats to energy supplies.

After Reuters, citing a source, reported that the ECB may consider going beyond the 25 basis point increase previously planned, the euro rose to almost a two-week high and euro zone government bond yields increased on Tuesday morning. Inflation in the eurozone reached 8.6% in June, according to official data released on Tuesday.