European shares rose on Friday, heading for their biggest monthly gain since November 2020, as investors became optimistic regarding corporate earnings and bet the Federal Reserve would slow interest rate hikes amid recession fears.
By 9 a.m. London time, the European Stoxx 600 index rose 0.8%, following jumping to a 7-week high in the previous session, according to Bloomberg.
Travel, leisure and mining stocks led the indices higher, while banking stocks also rose following better-than-expected results came out from Bank Bilbao Vizcaya Argentaria SA, Standard Chartered plc and BNP Paribas SA.
European shares rebounded this month following a sharp decline in the first half of the year, as investors bet that a lot of negative news regarding rising inflation and slowing growth was largely priced in, with expectations that the Fed will become less hawkish in raising interest rates.
However, financial market analysts warn that stocks might come under pressure in the second half.
Goldman Sachs strategists, led by Sharon Bell, said European stocks did not reflect expectations of a recession.
Meanwhile, outflows from European equity funds continued for the 24th straight week, with outflows worth $3.6 billion in the week to July 27, according to a Bank of America note.
