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* Ericsson, Logitech top STOXX 600 gainers
* Credit Suisse sinks to 20-month low
* Profit for STOXX 600 companies to grow 51% in Q4
Jan 25 (Reuters) - European shares recovered some lost
ground on Tuesday following their worst sell-off since June
2020, after upbeat earnings reports from Ericsson and Logitech
provided support.
The top European stock index gained 0.7% after
shedding 3.8% in the previous session on fears about aggressive
monetary policy tightening moves by the U.S. Federal Reserve and
the potential for military conflict in Ukraine.
"We're in a world where most players in the market have
never witnessed a rising rate environment. All they've had is
the Fed pumping liquidity in, and now it's a shock for the
participants," said Keith Temperton, sales trader at Forte
Securities.
Investors expect the Fed to signal on Wednesday that it
plans to raise rates in March after slashing borrowing costs to
near-zero soon after the onset of the pandemic nearly two years
ago.
Fed funds futures, which track short-term rate expectations,
have priced in a total of four rate increases this year, as the
central bank fights to stem soaring inflation.
Rate-sensitive banking stocks were the top gainers
in Europe, up 2.9%, while stabilizing commodity prices helped
lift sectors including basic materials and energy
.
Geopolitical turmoil, along with expectations of a hawkish
stance from the Fed, is likely to keep volatility high, said
Thomas Hempell, head of macro & market research at Generali
Investments, but the recent selloff may ultimately offer buying
opportunities.
"The pace of the global expansion is overall still
consistent with modest upside for equities."
In earnings-driven moves, Swiss computer peripherals-maker
Logitech International gained 6.2% after raising its
earnings forecast for the current fiscal year.
Sweden's Ericsson jumped 7.6% as it reported
fourth-quarter core earnings above market estimates, helped by
higher sales of telecoms gear with more countries rolling out 5G
networks.
Credit Suisse slipped 0.9% to hit a 20-month low
after the scandal-hit lender warned it was likely to report a
net loss in the fourth quarter as it flagged fresh legal costs
and said business in its trading and wealth management divisions
had slowed.
Watchmaker Swatch Group slipped 3.9% even as it
forecast double-digit sales growth in local currencies this
year.
Analysts expect profit for STOXX 600 companies to grow 51.0%
in the fourth quarter, as per data from Refinitiv IBES, with
energy, basic materials, industrial and financial sectors likely
to see the biggest growth.
Tech stocks extended declines with a 1.1% drop,
falling to near eight-month lows.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Shounak
Dasgupta)