* BASF rises on HSBC upgrade
* Defensives gain
* Heineken, Carlsberg to exit Russia
* Oil stocks shed 2% as crude slides on China COVID surge
March 28 (Reuters) - European shares gained on Monday, led
by automakers and defensive sectors, as hopes for a peace deal
between Russia and Ukraine boosted sentiment, while a drop in
crude prices pressured oil stocks.
The pan-European STOXX 600 index firmed 0.1%. The
benchmark is about 8% away from its all-time high hit in early
"Bond markets (are) being seen as somewhat toxic for
investors at the moment, and high rates of inflation make cash
toxic too, so there is little choice but to invest in equities
for now - and working in favor is that dividends ought to grow
over time with inflation," said Stuart Cole, head macro
economist at Equiti Capital.
European automakers and cyclical sectors including
utilities and construction stocks led gains.
The sell-off in euro zone bond markets showed no sign of
slowing, with traders pricing in as many as four European
Central Bank interest rate hikes within a year.
"(The ECB) is being seen as potentially opting for a softer
path of monetary tightening than Fed Chair Powell has suggested
for the U.S., which is boosting equities...but the overall
climate remains incredibly uncertain," Cole added.
Ukraine and Russia were preparing on Monday for the first
face-to-face peace talks in more than two weeks, but a senior
U.S. official said Russian President Vladimir Putin did not
appear ready to make compromises to end the war.
Meanwhile, oil prices tumbled more than $9 a barrel after
financial hub Shanghai launched a two-stage lockdown to contain
a surge in COVID-19 infections. Oil stocks plunged
2.1% to record their worst session in nearly four weeks.
Credit rating agency S&P Global cut its euro zone growth
forecast for the year to 3.3% from 4.4% previously, saying
higher energy prices caused by the war would hit households'
German chemicals giant BASF gained 1.6% after
HSBC upgraded the stock to "buy," saying "resilient demand" will
likely help first-quarter earnings.
French utility EDF slipped 0.3% after saying it
would have to announce new delays and cost overruns for its
Hinkley Point C nuclear plant project due to the Ukraine
conflict, supply chain disruption and inflation, among other
British lender Barclays fell 4.1% after disclosing
around a 450 million pound ($591.80 million) loss on mishandled
Carlsberg rose 3.5% after the Danish brewer
announced it would exit Russia along with brewing giant Heineken
, joining an exodus of Western companies as pressure
grows on Moscow following its invasion of Ukraine.
(Reporting by Sruthi Shankar and Anisha Sircar in Bengaluru;
editing by Uttaresh.V and Bernadette Baum)