European stocks drift, dollar up tracking rates outlook

Data last week showed inflation cooling in Britain. ©AFP

London (AFP) - Europe's main stock markets steadied Monday after record highs for London and Paris last week as investors bet on prospects for a brighter economy despite lingering recession risks caused by high inflation.

The dollar gained against main rivals on the likelihood of more US rate hikes, analysts said, while oil prices climbed.

"In the absence of US markets for President's Day it's been a quiet and subdued session for markets in Europe," said CMC Markets analyst Michael Hewson.

London's FTSE 100 index last week went above 8,000 points for the first time in history, shortly before the CAC 40 also hit a record high.

Investors are awaiting minutes from the Federal Reserve's last policy meeting for clues on the size of further hikes to US interest rates.

Some Fed members have said they were open to a 50 basis-point hike at the next gathering to further tame inflation, which remains elevated around the world.

Sweden's price increases tempered slightly in January but inflation remained in the double digits at 11.7 percent on soaring food prices that have offset sliding energy costs, official data showed Monday.

Stubbornly-high inflation has renewed concerns that the United States and other economies could tip into recession this year, with commentators warning that company earnings were also on course to take a hit.

At the same time, "the equity market...seems sanguine about the rates outlook, seemingly taking more signal from the better-than-expected macro data", said National Australia Bank's Tapas Strickland.

Data last week showed inflation cooling also in the United States and Britain.

The Russian economy contracted by 2.1 percent last year, the government's statistics agency Rosstat said Monday, absorbing Western sanctions over Moscow's military intervention in Ukraine better than expected.

The data was published on the eve of a keenly awaited speech to parliament by President Vladimir Putin, days before the first anniversary of the launch of Russia's offensive against Ukraine on February 24.

In earlier Asian trading, Shanghai jumped more than two percent.Banking giant Goldman Sachs said it saw mainland Chinese stocks surging this year as the country reopens after zero-Covid.