© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 31, 2024. REUTERS/Staff
By Shristi Achar A
(Reuters) -European shares pared earlier gains to be nearly flat on Monday as upbeat corporate reports were outweighed by broader subdued sentiment as investors reassessed their interest rate cut expectations.
The pan-European index was unchanged at 483.87 points, as of 0922 GMT.
UniCredit (LON:) jumped 9.9%, hitting its highest in over eight years after the Italian lender reported Q4 results above expectations and said it would boost shareholder returns.
The lender was the top gainer on Italy’s , with the index up 0.6%
Shares in French carmaker Renault (EPA:) rose 1.9%, with traders citing media speculation over a potential combination with rival Stellantis.
Lotus Bakeries climbed to the top of the benchmark index, up 12.6% after the Belgian biscuits producer reported its annual results.
Snuffing the positive corporate updates, recent robust jobs data from the United States poured cold water on expectations of an early rate cut in the world’s largest economy, setting the tone for other central banks.
Rates are likely to move down but more data will be needed to make policymakers confident that the inflation targets will be sustainably met, analysts at Societe Generale (EPA:) said in a note.
Markets are now pricing in a cut of around 125 basis points (bps) this year from the European Central Bank, down from around 140 bps last week. [0#ECBWATCH]
The yield on the German government bond also continued its rise and was last at 2.153%. [GVD/EUR]
Adding to the higher interest rate concerns, HCOB’s composite PMI for the bloc, compiled by S&P Global, indicated the euro zone economy showed tentative signs of recovery.
Among other movers, Nordea fell 4.6% after the Nordic bank reported fourth-quarter operating profit below estimates and proposed a lower-than-expected dividend for 2023.
Santander (BME:) and Lloyds (LON:) lost 4.3% and 1.6%, respectively, after the Financial Times reported that Iran used accounts from the banks to covertly move money around the world as part of a vast sanctions-evasion scheme.
Among the day’s other data, German services sector activity declined in January for the fourth consecutive month, while the French service sector contracted for the eighth straight month.
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