(For a Reuters live blog on U.S., UK and European stock
markets, click or type LIVE/ in a news window)
* Construction & materials among worst hit sectors
* ECB's Lagarde reaffirms rate hike plans
* Renault jumps after Jefferies upgrade
June 20 (Reuters) - European stocks rose strongly on Monday
after a sharp selloff last week on recession worries, while
gains in French shares were capped after President Emmanuel
Macron lost an absolute majority in the country's parliamentary
election.
The pan-European STOXX 600 index closed up 1.0%,
with battered banking, travel and energy
stocks leading the gains, but volumes were crimped with U.S.
markets closed for a holiday.
The benchmark shed 4.6% and hit over one-year lows last week
in a global sell-off that was fuelled by worries about
aggressive interest rate hikes by the U.S. Federal Reserve and
other major central banks sparking a recession.
"Friday's options expiry and the lack of big central bank
decisions might help equity bulls to wrench back control this
week, even if only for a short while," said Chris Beauchamp,
chief market analyst at online trading platform IG.
European Central Bank Chief Christine Lagarde on Monday
reaffirmed plans to raise interest rates twice this summer,
while fighting widening spreads in the borrowing costs of
different euro zone countries.
France's blue-chip CAC 40 rose 0.6%, the least among
major regional indexes, after Emmanuel Macron's centrist
Ensemble coalition secured the most seats in the National
Assembly over the weekend but fell well short of securing an
absolute majority needed to control parliament.
"It will mean that there will probably be less structural
reforms but we're already underweight Europe and it does not
significantly change our stance," said Willem Sels, global chief
investment officer, private banking and wealth management at
HSBC.
The STOXX 600 has shed almost 17% this year so far, as a
cocktail of worries from soaring inflation to China's slowing
economy and cost-of-living crisis in the UK dampen risk
appetite.
"We'll continue to see some volatility because inflation, in
our view, is not going to start to come down until the end of
this year," Sels added.
Data showed German producer prices surged by a
more-than-expected 33.6% in May, on a year-on-year basis.
Europe's construction and materials index dropped
1.8% after Irish building insulation specialist Kingspan
said the mood in most end markets deteriorated resulting in a
dip in orders over the last two months.
Kingspan's shares tumbled 11.4%, while Danish peer Rockwool
and France's Saint-Gobain fell around 4%
each.
French carmaker Renault jumped 9.7% after
Jefferies upgraded the stock to "Buy".
Valneva surged 29.3% after U.S. healthcare giant
Pfizer agreed to invest 90.5 million euros ($95.24
million) for an 8.1% stake in the French vaccine company.
(Reporting by Sruthi Shankar and Susan Mathew in Bengaluru;
Editing by Bernadette Baum)