European shares gain on Ukraine hopes

Volkswagen surges on upbeat earnings while Prosus slumps on China tech regulation worries

European stocks rose on Monday, clinging to hopes of diplomatic efforts by Ukraine and Russia to end weeks-long conflict, while shares in Volkswagen surged after the German car-maker doubled its operating profit.

The pan-European Stoxx 600 index ended 1.2 per cent higher, extending gains from Friday when Russian president Vladimir Putin signalled a positive shift in talks with Ukraine. Russia and Ukraine gave their most upbeat assessments following weekend negotiations, even as Russia attacked a base near the Polish border and fighting raged elsewhere.


Ryanair led the charge in Dublin, rising by over 4 per cent to €13.84 on talk of a possible deal to halt the fighting in Ukraine. The airline's share price has been hurt by the possibility of a prolonged war in central Europe and its likely impact on travel.

Insulation-maker Kingspan and packaging giant Smurfit Kappa were similarly buoyed by the more upbeat assessment, rising by 2.7 per cent to €87.78 and by 4.7 per cent to €39.38. However, traders said markets remained volatile.


The prospect of interest rate hikes globally – possibly starting with the US this week – fuelled value increases across the financial sector. Bank of Ireland and AIB rose by 2 per cent and 0.3 per cent respectively.

Irish engineering company Mincon fell by approximately 1 per cent to €1.23 despite announcing that it grew revenue by 11 per cent last year amid significant supply chain challenges. Paddy Power Betfair-owner Flutter fell by 1.7 per cent to €104.90.


Auto stocks climbed 3.3 per cent to lead gains among sectors. Volkswagen surged 4.4 per cent as higher prices and a more favourable product mix boosted operating profit.

However, China-exposed miners, which have outperformed recently, fell 2.6 per cent as surging Covid-19 infections in the world's top metals consumer fanned worries over economic growth prospects. Shares of luxury brands such as LVMH and Richemont, which depend on China for a large part of their sales, also declined.

Telecom Italia climbed 5 per cent after it said it would start formal talks with KKR to assess the US fund's potential €10.8 billion offer for Italy's biggest phone group.

Dutch tech investor Prosus, which owns a stake in China's Tencent, tumbled 10.4 per cent, reflecting worries over regulation.

French power utility EDF slipped 0.1 per cent after it warned on its 2022 profit outlook, while shares of Italian energy group Eni dropped 0.4 per cent on the company's agreement to sell a 49 per cent stake in power generation unit Enipower to US investment firm Sixth Street.


UK shares rose on Monday as hopes for progress in Russia-Ukraine peace talks lifted sentiment globally, with financials leading the advance on FTSE 100.

The blue-chip FTSE 100 index climbed 0.5 per cent in volatile trade, with banks and insurers leading the gains. The domestically-focussed mid-cap index advanced 1.3 per cent to extend the previous week’s gains and outperform the benchmark index.

Joining the corporate exodus from Russia, British American Tobacco said on Friday it would exit Russia and cut its fiscal 2022 guidance as a result. Shares of the company were down 1.4 per cent.

Miner Rio Tinto fell 4.8 per cent after the miner proposed to buy the 49 per cent of Canada's Turquoise Hill it does not already own for about $2.7 billion.


Gains in financial and healthcare shares bolstered the Dow and the S&P 500 index on Monday, as investors pinned their hopes on Russia-Ukraine peace talks, while shifting their focus to the upcoming Federal Reserve policy meeting.

The conflict has roiled global financial markets and fuelled concerns about runaway inflation as prices of oil and other commodities skyrocket in the face of tough Western sanctions against Russia.

Seven of the 11 major S&P sectors advanced, with financials leading the pack on a 2 per cent gain, followed by the healthcare sector.

Bank of America rose 3 per cent, while the broader banks index added 2.6 per cent, in line with a surge in US Treasury yields ahead of what is expected to be the Fed's first rate hike in three years at its March 15th-16th meeting to try to tame soaring inflation. – Additional reporting by Reuters

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times