Volkswacht Bodensee - European stocks rebound, oil higher in major trading week

Share prices began the week higher following volatile trading in recent sessions as investors track concerns over high inflation and interest rate rises plus Covid uncertainty and the Ukraine-Russia crisis.

"There's no shortage of risk events for the markets this week with rate decisions from the Bank of England and the ECB (European Central Bank), the US jobs report and a slew of earnings," noted Victoria Scholar, head of investment at Interactive Investor.

Most Asian stock markets closed higher Monday, though traders remained nervous about the Federal Reserve's plan to hike US interest rates as it battles surging inflation.

The tech-heavy Nasdaq led the strong finish for US equities Friday thanks to soaring fourth-quarter profits at Apple, which lifted optimism about consumer spending and the economic recovery.

The strong performance, coupled with strong US economic data, filtered through to Asia, where trade was thinned by investors winding down ahead of the three-day Lunar New Year break that starts Tuesday.

- Rates in focus -

The gains followed a period of upheaval across world markets as the Fed readies to withdraw the vast financial support put in place at the start of the pandemic, which has fuelled a near two-year equity rally.

Observers debate the Fed's likely moves as US inflation sits at a four-decade high, with some saying it could hike up to seven times before 2023, with an initial 50 basis point move in March.

The Bank of England is widely expected to increase its main interest rate by a quarter-point Thursday to 0.5 percent.

That follows its decision in December to increase borrowing costs from a record-low 0.1 percent to 0.25 percent to combat decades-high inflation.

This week sees also an ECB policy update.

ECB chief Christine Lagarde has downplayed inflation concerns, arguing that the forces pushing up prices across the eurozone are expected to ease over 2022.

Official data Monday showed the eurozone economy grew 5.2 percent last year after a pandemic-induced recession.

Markets reacted positively to the re-election of President Sergio Mattarella in eurozone member Italy over the weekend.

Milan's FTSE MIB index was up 1.1 percent in late morning deals.

"The result of Italy's presidential vote has gone down well in the markets," said Capital Economics analyst Jack Allen-Reynolds, noting that government bond yields fell.

The only other serious contender for the job -- Prime Minister Mario Draghi -- was needed at the head of government to keep Rome on track with major reforms to the tax and justice systems and public sector.

- Oil up before OPEC -

Oil prices were higher as OPEC and its allies prepare to meet Wednesday to discuss a further increase in output.

Brent crude last week surpassed $90 per barrel, a level last seen in October 2014.

The price of West Texas Intermediate (WTI) crude hit its highest level in more than seven years earlier this month, fuelled by easing concerns about the Omicron Covid variant and geopolitical tensions.

Analysts have said that if Russia sends troops into Ukraine, crude prices could top $100 for the first time since 2014.

- Key figures around 1015 GMT -

London - FTSE 100: UP 0.2 percent at 7,480.44 points

Frankfurt - DAX: UP 1.3 percent at 15,515.41

Paris - CAC 40: UP 0.9 percent at 7,024.95

EURO STOXX 50: UP 1.3 percent at 4,189.18

Tokyo - Nikkei 225: UP 1.1 percent at 27,001.98 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 23,802.26 (close)

Shanghai - Composite: Closed for a holiday

New York - Dow: UP 1.7 percent at 34,725.47 (close)

Euro/dollar: UP at $1.1178 from $1.1158 Friday

Pound/dollar: UP at $1.3445 from $1.3389

Euro/pound: DOWN at 83.13 pence from 83.16 pence

Dollar/yen: UP at 115.39 yen from 115.24 yen

Brent North Sea crude: UP 0.5 percent at $88.97 per barrel

West Texas Intermediate: UP 0.8 percent at $87.51 per barrel

D.Schneider--BTB