Christine Lagarde tells bank’s annual conference in Portugal that interest rates will need to be higher for longer than previously thought
European stocks inched moderately higher, failing to keep up positive momentum that lifted Asian stocks earlier in the session, as investors focused on concerns about the economic outlook for Europe and the United States.
The blue-chip Stoxx 50 index eked out a 0.6 per cent jump while the pan-European Stoxx 600 remained flat on the session. European banks gained after Ms Lagarde’s comments, adding fuel to bets that euro zone interest rates could remain elevated for some time. Spanish lenderwas up 1.2 per cent and, which slipped 1.6 per cent after the German carmaker announced it is planning to cut back production of one of its electric SUV models due to weak sales. Energy shares lagged behind, weighed down by TotalEnergies after it was sued again over a project to pump oil in Uganda.
Bank of America strategists last week characterised the UK as the “stagflationary sick man of Europe” in a note last week, pointing to a combination of high prices and economic contraction, a “crumbling” National Health Service, 6 per cent mortgage rates, and a UK yield curve that is the most inverted since 2000.
But UK banks helped lift the index on Tuesday amid expectations that interest rates could continue to rise as central banks struggle to cool inflation.
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