European stocks post their first weekly gain in four

The DAX chart of the German stock price index is pictured on the stock exchange in Frankfurt, Germany, September 7, 2022. REUTERS/Staff

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  • Miners Soar on Rising Metal Prices
  • STOXX 600 marks weekly gains of 1.1%
  • Banks expect another 75 basis point ECB rate hike

Sep 9 (Reuters) – European stocks posted their first in four weekly gains on Friday, boosted by a surge in bank stocks on expectations of further monetary policy tightening from the European Central Bank, while soaring metal prices pushed up mining stocks.

The pan-European STOXX 600 index (.STOXX) rose 1.5% to close at over-week highs.

European stocks briefly lost gains in afternoon trade following reports that ECB policymakers are set to launch a debate next month on cutting the $4 trillion bond pile euros. Read more

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It comes a day after the central bank raised policy rates by an unprecedented 75 basis points (bps) and promised further hikes. Several money houses are forecasting another rate hike of 75 basis points in October. Read more

Eurozone banks (.SX7E), rocked by worries about their profitability in a low interest rate environment, jumped 3.2% to mark their biggest percentage rises in nearly two months. The index is still down 16.3% since the start of the year.

“Traders are in a risk mood even though yesterday saw an ECB rate hike and hawkish comments from (Fed Chairman) Jerome Powell,” said David Madden, market analyst at Equiti. Capital.

“It’s possible that dealers are getting used to the idea of ​​rising interest rates and high bond yields.”

Miners (.SXPP) jumped 3.0% as a weaker dollar and further stimulus for China’s slowing economy pushed up prices for industrial metals and iron ore.

Investors are focused on a meeting of energy ministers from European Union countries later today, where they will find solutions from a long list of possible measures to protect citizens from exorbitant energy prices at the approach of winter. Read more

As the STOXX 600 managed to end the week up 1.1%, investors doubt the rally can be sustained as Russia shuts off its gas taps to Europe indefinitely amid a cost crisis of the life that is being prepared in the region.

“We remain negative on European equities amid heightened geopolitical/energy uncertainty as central banks tighten policy amid an economic downturn,” Morgan Stanley analysts said in a note.

Shares of Telecom Italia (TIM) (TLIT.MI) rose 2.8% as sources familiar with the matter said it was set to launch a process to sell a minority stake in its branch of business services. Read more

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Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Jonathan Oatis

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