For Sruthi Shankar and Susan Mathew
Oct 11 (Reuters) – A strong rally in mining stocks boosted the European stock index on Monday, which rebounded from all earlier losses on concerns about inflation and the upcoming earnings season.
* The European mining sector rose 3% and posted its biggest daily gain in three months as iron ore and coking coal rallied on supply concerns, while base metal prices rose by rising cost of energy.
* As the global energy crisis pushed up crude prices, oil stocks rose more than 1%, as did stocks in the auto sector, offsetting losses in the travel and leisure, utilities and retail sectors.
* The pan-European STOXX 600 Index recovered from losses of up to 0.6% on the day, to end marginally higher. The strong presence of commodity-related companies led the London FTSE 100 to perform better, rising 0.7%.
* “Inflation will remain higher than expected due to rising energy prices and a shortage of goods. The energy momentum will reverse next year due to base effects and lower oil and gas prices, “said the Capital Economics global economics team.
* “The shortage of goods is worsening and will persist for some time (…) These pressures should begin to ease next year. But there is a risk that shortages will trigger a more persistent rebound in price pressures.” added the report.
* With the third quarter results about to start this week, investors are concerned about rising energy costs, which is making itself felt in company profits. Profit growth is estimated to be 29.6% for US companies and 45.6% for European companies, according to data from Refinitiv IBES.
* The banking index peaked since February 2020, recouping nearly all of the pandemic-induced losses as investors raised interest rate expectations. Money markets forecast a 10 basis point rate hike by the European Central Bank by the end of next year.
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