Shashwat Chauhan and Jesus Calero
(Reuters) – European shares rose on Monday, shrugging off initial losses as auto and banking stocks rose as attention remained focused on the first round of French parliamentary elections later this week.
The pan-European index was up 0.4% as of 0838 GMT. The automotive sector led the gainers with growth of 1.6% as the European Union and China agreed to negotiate planned tariffs on Chinese-made electric vehicles (EVs).
Eurozone banks added 0.9%, while Italian lenders such as BPER, UniCredit and Monte dei Paschi di Siena added between 2.4% and 3.7%.
The focus will be on the first round of France’s parliamentary elections this week, with opinion polls showing an advantage for the far-right National Rally party (RN) and its allies.
The French index started the week up 0.5%.
Later in the day, investors awaited comments from at least four members of the European Central Bank (ECB), including board member Isabel Schnabel, for clues about the trajectory of the central bank’s monetary policy.
In data, German business morale unexpectedly fell in June due to more pessimistic expectations for Europe’s largest economy, according to the survey.
“Optimism at the start of the year has given way to realism. (The latest) data showed the German economy is still struggling to gain momentum,” said Carsten Brzeski, global head of macro at ING.
Last week, data for June showed that business activity growth in Germany had slowed over the past two months, while broader eurozone data showed business activity growth had slowed sharply.
European shares clawed back some losses last week after falling following the shock of the French election earlier this month. However, the boom in technology stocks has capped gains.
Among other shares, Hochtief rose 8.7% as Jefferies upgraded its rating on the German construction company from “hold” to “buy”, citing the company’s growing involvement in high-tech infrastructure projects.
Shares of Belgian pharmaceutical company argenx jumped 7.1% after it said the US FDA had approved Vyvgart Hytrulo, a drug to treat chronic inflammatory demyelinating polyneuropathy.
Britain’s Prudential added 6.3% after the insurance group launched a $2 billion share buyback program.
On the other hand, shares of Eurofins Scientific fell as much as 19% after short seller Muddy Waters (NYSE:) said it was short of shares in the French testing company.
Shares in Germany’s Zalando fell 6.3% after Morgan Stanley cut the online retailer’s weight from “overweight” to “equal weight.”