European stocks rebound, but should end volatile September with losses

September 30 (Reuters) – European stocks continued their rally on Thursday after a massive selloff earlier this week, but were forecast for monthly declines amid concerns about the slowing global economy and rising inflation.

The pan-regional STOXX 600 index (.STOXX) rose 0.6%, led by technology stocks (.SX8P), which were at the center of the market rout, while miners (.SXPP) rose after sharp declines fueled by concerns about the Chinese economy. .

Defensive sectors such as real estate (.SX86P), healthcare (.SXDP) and food and beverage (.SX3P) also advanced.

The European equity benchmark is on course to end September with losses of 2.8% after a seven-month streak of consecutive wins, as a surge in government bond yields pushed investors in the sectors growth such as technology to economically sensitive banking and energy stocks.

“Recent market movements suggest that a rotation is underway in favor of sectors and assets that are benefiting from a shift in consumption from goods to services,” BCA analysts said in a note.

“Since we don’t expect rising interest rates to have a negative impact on the real economy over the next 12-18 months, we recommend that investors maintain a moderate overweight in equities.”

A growing number of risks, including the hawkish stance of the U.S. Federal Reserve, supply chain constraints and financial woes at Chinese real estate developer Evergrande, weighed on sentiment this month, even as investors bet on a stable European economy.

The Swiss market with a strong defensive component (.SSMI) was among the largest declines this month, while the Spanish (.IBEX) and British (.FTSE) indices with a strong banking component remained dynamic.

Among individual stocks, Sweden’s H&M (HMb.ST) stagnated after the retailer said supply disruptions affected sales in September, while spirits maker Diageo Plc (DGE.L) gained 2.5% after forecasting an increase in operating margins as people switch to premium brands. Read more

Swedish cloud communications service provider Sinch (SINCH.ST) rose 4.4% after announcing it agreed to purchase cloud-based email delivery platform Pathwire in a deal worth around $ 1.9 billion. Read more

UK online fashion retailer Boohoo (BOOH.L) fell 10.7% as it warned freight inflation and higher wages for its distribution center workers would impact margins full year beneficiaries. Read more

Reporting by Sruthi Shankar in Bengaluru; Editing by Subhranshu Sahu and Arun Koyyur

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