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European Shares Seen Up Despite Rate Hike Worries

stockmarkets jan22 10jan22 lt

European stocks are seen opening on a firm note Monday despite worries the Federal Reserve will raise interest rates as soon as March.

Friday's U.S. employment numbers showed stronger-than-expected wages, raising the prospect of earlier than expected rate hikes.

Asian stocks traded mixed, with Shanghai and Hong Kong markets climbing after the China Securities Regulatory Commission said it would adopt various measures to avoid volatility and "firmly" prevent big fluctuations. Japanese markets were closed for a holiday.

A cautious undertone prevails as the Omicron Covid-19 variant continues to spread rapidly. The discovery of a new strain that combines Delta and Omicron is also on the radar.

The dollar index was flat and yields on 10-year U.S. Treasury notes were near highs last seen in early 2020, while oil traded flat after reports that Kazakhstan's largest oil venture Tengizchevroil is gradually normalizing production.

Eurozone unemployment figures are due out later in the session. Across the Atlantic, this week's trading may be impacted by reaction to reports on consumer and producer price inflation, retail sales and industrial production.

There are testimonies and speeches by several Fed officials throughout the week.

Incumbent Fed Chairman Jerome Powell's confirmation hearing in the Senate Banking Committee for his second term will take place on Tuesday, while the hearing for Lael Brainard, the vice-chair nominee, is on Thursday.

Elsewhere, China releases its consumer and producer price inflation data on Wednesday.

U.S. stocks ended mostly lower on Friday as the December jobs report pushed the 10-year Treasury yield to a pandemic-era high. Despite weaker than expected job growth, the unemployment rate slid to 3.9 percent in December from 4.2 percent in November.

The Dow ended on a flat note while the S&P 500 dropped 0.4 percent and the Nasdaq Composite fell 1 percent to extend losses for the fourth consecutive session.

European stocks ended Friday's session broadly lower as German industrial output data disappointed, a measure of inflation in the euro zone hit a new record high in December and NATO top diplomats gathered to discuss Russia's troop build-up near Ukraine.

The pan European Stoxx 600 fell 0.4 percent. The German DAX declined 0.7 percent and France's CAC 40 index eased 0.4 percent while the U.K.'s FTSE 100 rose half a percent.

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