European stocks flat on rate hike jitters; Novo Nordisk jumps

By Shreyashi Sanyal

(Reuters) – European stocks were range-bound on Tuesday as fears of further interest rate hikes by major central banks amid slowing economic growth thwarted support from healthcare giant Novo Nordisk.

The pan-European STOXX 600 index edged up 0.1% to 460.42 points. On Monday, the index tumbled as data indicating tepid trade activity in the United States triggered profit-taking after the previous week’s gains.

Defensive Health stocks gained 0.8%.

Danish drug developer Novo Nordisk rose 3.5% as trading resumed after a public holiday in Copenhagen on Monday. The company said it had entered into talks to buy a majority stake in medical device designer Biocorp. Shares of the French company jumped 15.7%.

Warmongering comments from European Central Bank (ECB) President Christine Lagarde and Bundesbank President Joachim Nagel on Monday cemented expectations of further central bank rate hikes in June.

Dutch central bank chief Klaas Knot said underlying price pressures in the eurozone may prove more difficult to contain, but monetary policy is showing signs of effectiveness and further price hikes. rate should be done step by step.

The comments come even as US money markets are betting that the Federal Reserve won’t raise rates this month.

“We are potentially heading into a riskier environment,” said Stuart Cole, chief macroeconomist at Equiti Capital.

“I can see a scenario where the outlook for growth looks increasingly challenging in both Europe and the US and central banks suddenly find themselves faced with the dilemma of whether to support growth as well.”

The STOXX 600 index started the month on a lackluster note as attention turns to high-level central bank meetings next week, including the Fed and ECB.

Eurozone retail sales data is due later in the day, and will be assessed for the impact of the ECB’s more rapid tightening cycle to combat high inflation.

Oil and gas stocks fell 0.8%, following the fall in crude prices. [O/R]

BKW plunged 9.4% to the STOXX 600 low after UBS twice downgraded its rating on the Swiss energy company to “sell” to “buy”.

Idorsia rose 9.5% after entering into strategic talks with an undisclosed party to sell its business in the Asia-Pacific region, excluding China, for up to 400 million francs.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Sherry Jacob-Phillips and Eileen Soreng)

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