European shares up, focus turns to ECB rate decision

European shares climbed on Thursday, led by tech and real-estate stocks, with the focus squarely on the European Central Bank’s interest rate decision a day after the US Federal Reserve acknowledged its progress on curbing stubborn price pressures.

The pan-European STOXX 600 (.STOXX) was up 0.7% at 0935 GMT, on track to snap a three-day losing streak after clocking its biggest January gain since 2015, as a milder winter and China’s reopening brightened the outlook for the euro zone economy.

The Euro STOXX Volatility index (.V2TX) slipped to an over one-year low, hinting at easing investor anxiety, reported Reuters.

Rate-sensitive technology (.SX8P) and real estate stocks (.SX86P) jumped around 3% each, with the former hitting a ten-month high.

The ECB is expected to raise its deposit rate by 50 basis points (bps) to 2.5% and pencil in more hikes in the next few months, with the only open question being how big these would be. The Bank of England is also poised to raise interest rates by 50 bps later in the day.

“Markets are looking for indications of where rates go from here; given the mixed signals from core inflation remaining sticky, all eyes will be on what the ECB does next,” said Edward Stanford, head of European equity strategy at HSBC PLC.