European Markets Close Higher As Energy, Mining Stocks Rally

European stocks closed higher on Tuesday, as a rally in commodity prices triggered some hectic buying in materials and energy sectors.

The mood, however, remained cautious amid concerns about a surge in Covid cases in China, geopolitical tensions, and fears over further monetary tightening by central banks.

Investors were also reacting to mixed comments from ECB policymakers on the rate hike path.

After several ECB officials hinted at slower rate hikes, ECB policymaker Robert Holzmann has backed another 75-bps rate hike at the next rate-setting meeting in December.

The pan European Stoxx 600 climbed 0.73%. The U.K.'s FTSE 100 surged 0.96%, Germany's DAX gained 0.29% and France's CAC 40 advanced 0.35%, while Switzerland's SMI edged down 0.1%.

Among other markets in Europe, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Sweden and Turkiye closed higher.

Czech Republic ended weak, while Iceland and Spain closed flat.

Shares of oil firms rose, tracking higher oil prices after Saudi Arabia's energy minister denied a report that suggested OPEC+ was considering an increase in supply.

In the UK market, Harbour Energy shares climbed more than 7%. BP gained 6.5%, while Entain and Shell moved up 5.3% and 4.84%, respectively.

Glencore, Frasers Group, Fresnillo, JD Sports Fashion, Antofagasta, Rio Tinto and BAE Systems gained 2 to 4%. Sainsbury (J), Endeavour Mining, Anglo American Plc, SSE, Kingfisher and Tesco also ended notably higher.

Babcock International, an aerospace, defense and nuclear engineering services company, surged 2% after backing its FY23 outlook.

Airtel Africa, Hargreaves Lansdown and Vodafone Group ended more than 3% down. St. James Place, Ocado Group, Sergo, Schrodders, ICP, CRH and Croda International Group lost 1 to 2.5%.

In the German market, Covestro rallied more than 4.5%. Brenntag, BASF, MTU Aero Engines, Fresenius, Siemens and Daimler gained 1 to 2%.

HelloFresh, Sartorius, Zalando, Merck, Fresenius Medical Care, Deutsche Wohnen and Qiagen ended lower by 1 to 2.5%.

In Paris, TotalEngines climbed nearly 4.5%. ArcelorMittal gained about 2.5%, while Publicis Groupe, Thales, Saint Gobain, Michelin and Stellanis gained 1 to 2%.

Teleperformance drifted down 3.7%. Kering and L'Oreal posted moderate losses.

In economic releases, the U.K. budget deficit widened in October as the government started paying under the energy support scheme, official data showed.

Public sector net borrowing, excluding banks, increased by GBP 4.4 billion from the last year to GBP 13.5 billion in October, the Office for National Statistics reported.

This was the fourth highest October borrowing since monthly records began in 1993 but below economists' forecast of GBP 22 billion.

A report from the European Central Bank said the euro area current account deficit narrowed to a six-month low in September largely driven by the decline in goods deficit and rising primary income. The current account deficit decreased to a seasonally adjusted EUR 8.06 billion from a record EUR 26.94 billion shortfall in August. This was the smallest deficit since March.

According to preliminary figures from the European Commission, Eurozone consumers' pessimism eased more than expected in November to its strongest level in five months.

The flash consumer confidence index rose 3.6 points to -23.9 in November. Economists had forecast a score of -26.0. This was the highest reading since June, when the score was -23.8.

The Organization for Economic Co-operation and Development (OECD) says in its Economic Outlook that the global economy faces significant challenges as severe energy crisis pushed up inflation and lowered economic growth all around the globe, necessitating policy actions to combat inflation and targeted fiscal support to vulnerable section.

The Paris-based OECD forecast global growth to ease to 2.2% next year from 3.1% in 2022. In 2024, growth is projected to be 2.7%, helped by initial steps to ease policy interest rates.

Eurozone real GDP growth is seen at 3.3% in 2022 and only 0.5% in 2023 owing to Russia's war of aggression against Ukraine, monetary policy tightening and the global slowdown. Growth is projected to rebound to 1.4% in 2024.

The UK economy is projected to expand 0.2% in 2024 after contracting 0.4% next year. Inflation is expected to peak at around 10 percent late this year before gradually declining to 2.7% by the end of 2024.

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