Mixed earnings cap gains in European shares ahead of ECB decision

[April 14, 2022]  (Reuters) - European shares edged higher on Thursday after a mixed batch of earnings, while investors awaited the European Central Bank's policy decision amid risks of an economic slowdown as the Ukraine crisis drives up inflation.

The pan-European STOXX 600 index rose 0.1% following a strong finish on Wall Street and gains in Asian shares. Euro zone shares edged 0.3% higher.

Birkin bag maker Hermes gained 1.4% after its quarterly sales beat estimates, lifted by strong appetite for its luxury accessories, particularly in the United States and Europe.

Battered travel and leisure stocks gained the most among sectors, with low-cost airline Wizz Air up 7.2% on signs of encouraging summer bookings.

Sweden's Ericsson slumped 6% after it warned of a potential fine by U.S. regulators for its handling of a bribery investigation in Iraq and reported a slide in quarterly earnings.

Investors are waiting to see if the ECB decision, due at 1145 GMT, will provide a clearer schedule for the end of its bond purchases programme and subsequent interest rate hikes.

The ECB, which is facing a policy dilemma over record high inflation and dent to euro zone growth from the Ukraine war, is lagging most other major central banks, which started raising rates last year.

"Despite the rising risks to growth, our economists continue to expect the ECB to overweight inflation concerns," RBC analysts said in a note. "Whilst playing for time, we would expect June to be teed up as a meeting where further key decisions to guide the tightening process will be taken."

Traders have ramped up expectations of ECB rate hikes, with money markets pricing in a combined 70 basis points of hikes this year even though not one of the ECB's 25 policymakers has called for such aggressive tightening.

Worries about rapid rate hikes and a prolonged conflict in Ukraine have played on investors' minds, putting the STOXX 600 on course to end the holiday-shortened week lower.

European stock markets will be closed on Friday and Monday on account of Easter holidays.

Among other stocks, Italian airport and motorway operator Atlantia gained 4.9% after the holding company of Italy's Benetton family and U.S. investment fund Blackstone said they will spend up to 12.7 billion euros ($14 billion) to take the company private.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

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