By Johann M Cherian
May 27 (Reuters) – European shares edged up in the early hours on Wednesday, trading close to an all-time high hit before the U.S.-Iran war started, driven by auto and chemical stocks, while investors kept a wary eye on escalating tensions in the Middle East.
The pan-European STOXX 600 index edged up 0.2% to 629.51 points by 0829 GMT, bringing it about 1% away from a record high hit in February before the conflict started.
Automobiles and parts was among the top gainers across sectors, rising 2.6%, with Volvo Cars
The sector was also lifted after data showed that registrations in the European Union, Britain, and the European Free Trade Association rose 7% in April, taking the total for January through April 4.8% above a year earlier.
Chemical stocks also gained over 1.3% as AkzoNobel
Meanwhile, escalating tensions in the Middle East kept gains in check, as Iran called recent U.S. strikes a violation of the ceasefire, while Israel bombed Lebanon.
“Markets are sort of just putting it to the back of their mind,” said Michael Hewson, a senior financial analyst at iFOREX Europe.
“The new status quo is essentially continued uncertainty about a ceasefire, and until such times as things deteriorate really badly, they’re going to work on the basis that there’s going to be a resolution at some point.”
Brent crude prices lost 2%, but at $97 a barrel, they kept inflation worries at the top of investors’ minds as markets priced in at least two 25-basis-point interest rate hikes by the European Central Bank this year.
Dutch central bank chief Olaf Sleijpen said that the persistence of energy price shocks will be a key factor guiding the ECB’s next policy decision.
Among laggards, Naturgy lost 4.3% after Private equity fund CVC Capital Partners sold its entire 13.8% stake in the Spanish energy company, worth around €4 billion ($4.66 billion).
Clean energy stocks such as Nordex fell 5%, while Orsted and Vestas lost 2% and 4%, respectively.
Pernod Ricard edged up 3.2%. Reuters reported that Indian investigators concluded that the beverage maker withheld the age and composition of its Scotch whisky imports to pay lower tariffs and asked the company to pay $314 million in back taxes.
($1 = 0.8588 euros)
(Reporting by Johann M Cherian in Bengaluru; Editing by Mrigank Dhaniwala and Rashmi Aich)
