3 Minutes, by Reuters (Reuters) – European equities reversed session losses on Monday, leaving them barely half a percent shy of all-time highs, while Morrisons’ roughly 12 percent gain drove London mid-caps to new highs. On July 5, 2021, a graph of the German stock market index DAX is shown at the stock exchange in Frankfurt, Germany. REUTERS/Staff The pan-European STOXX 600 index increased 0.3 percent for the third straight session, extending its gains. Businesses in the Eurozone increased activity at the strongest rate in 15 years in June, according to PMIs, as additional coronavirus restrictions were eased, boosting the bloc’s leading service industry. The increase occurred at the expense of rising inflationary pressures. “As basis effects are reversed and shortages ease,” Jessica Hinds, a Europe economist at Capital Economics, said, “there is solid reason to expect headline inflation to drop back sharply in 2022 as base effects are reversed and shortages ease.” Gains were led by banks, material stocks, and travel companies on the day. Trading volumes, on the other hand, were low due to the fact that U.S. markets were closed for the long Fourth of July weekend. With all eyes on British Prime Minister Boris Johnson, who was supposed to lay down proposals to eliminate social and economic COVID-19 restrictions in England on Monday, the blue-chip index in London hit over two-week highs. Meanwhile, British mid-caps had its best day in two months, rising 1.2 percent. Morrisons’ stock soared to a near eight-year high after Apollo Global Management, a private equity firm based in the United States, became the third bidder for the British grocery chain, indicating that it was considering an offer. Morrisons and another business agreed on a 6.3 billion pound ($8.7 billion) merger on Saturday. “Perhaps interested parties only moved once they saw that UK assets were becoming more appealing to offshore investors,” Russ Mould, investment director at AJ Bell, speculated. The broader STOXX 600 index has struggled to recapture an all-time high set in mid-June, as an increase in virus cases raised the prospect of new travel restrictions, while a recent spike in inflation has aroused fears of a speedy reduction of monetary stimulus, despite ECB promises to the contrary. Following the central bank’s decision to keep its policy unchanged last month, ECB President Christine Lagarde said on Friday that the euro zone economy was starting to recover from the pandemic’s effects, but that the recovery was still fragile. Due to the Delta variant, France’s Health Minister Olivier Veran has warned that the country might face a fourth wave of the pandemic. French stocks fell by half a percent before recovering to gain 0.2 percent by the end of the day. In Bengaluru, Sagarika Jaisinghani reported; Shounak Dasgupta edited; Uttaresh.V and Andrew Heavens contributed./n
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