European shares edge higher ahead of ECB rate decision
By Bansari Mayur Kamdar
(Reuters) -European shares inched higher on Thursday, with investors cautious ahead of the European Central Bank's rate decision where it is likely to raise interest rates for a tenth consecutive time.
Markets are now pricing in a 65% chance of a 25-basis-point hike that could take Europe's key interest rate to a record peak, up from around a 40% chance on Monday.
Analysts and investors had been leaning towards a pause in the ECB's rate hike until Reuters reported on Tuesday that the central bank was set to raise its forecast for inflation next year to more than 3%.
«The morose economic outlook brings investors to think that even if the ECB hikes today, it will certainly be the last one, and that in less than a year from now, we will be talking about the first rate cut in Europe due to economic weakness,» said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The pan-European STOXX 600 inched 0.1% higher by 0805 GMT, supported by healthcare and commodity-linked stocks.
The energy index gained 1%, tracking a recovery in crude prices, while miners added 1.7% on firmer metal markets.
Neste climbed 3.1% as Goldman Sachs raised the Finnish oil refiner and biofuels producer's stock rating to «buy».
A European Commission investigation into Chinese electric vehicles believed to have benefited from state subsidies will have a «negative» impact on economic and trade ties, China's commerce ministry warned.
Leading sectoral losses, the STOXX Europe 600 auto index declined 1.1%, with Germany's Mercedes, BMW (ETR:BMWG) and Volkswagen (ETR:VOWG_p) and France's Renault (EPA:RENA) falling between 1.1% and 1.9%.
Shares of Deliveroo (OTC:DROOF) rose 5.5% after activist-investor Sachem Capital (NYSE:SACH) said
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