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Europe shares reverse losses
ECB may need to raise rates by 75 bps in Oct, policymakers
SalMar at STOXX 600 bottom on Norway tax-hike plan
Sept 28 (Reuters) - European shares gained on Wednesday,
with the UK's blue-chip index reversing losses after the Bank of
England said it would purchase bonds to cool a turmoil in
markets stemming from the British government's fiscal plans.
The continent-wide STOXX 600 index was up 0.3%
after falling nearly 2% earlier in the session as an
intensifying energy crisis in the region and the relentless
surge in global bond yields fuelled worries about a recession.
The BoE said it would buy as many long-dated government
bonds as needed between now and Oct. 14 to stabilise financial
markets, adding that it would postpone next week's start of its
gilt sale programme.
The pound rose and UK gilt prices rocketed. London's
FTSE 100 closed up 0.3% after falling as much as 2%.
"I don't think the markets view this as an all clear. They
view this as very necessary first aid," said Steve Sosnick,
chief strategist at Interactive Brokers.
The BoE move came after the International Monetary Fund and
ratings agency Moody's ramped up pressure on Britain to reverse
a new economic strategy revealed last week which proposed
unfunded tax cuts, prompting a surge in bond yields and a
searing drop in the pound.
"We're still going to have to see over the coming days and
weeks whether this was a temporary measure. We're going to have
to see if the UK government backs off its fiscal plans after the
disastrous response that they received in the marketplace,"
Euro zone borrowing costs fell, reversing an earlier rise to
Heightening jitters about rising interest rates hitting
economic growth, the European Central Bank may need to hike
rates by another 75 basis points at its October meeting and move
again in December to a level that no longer stimulates the
economy, policymakers said on Wednesday.
The ECB lifted interest rates by a combined 125 basis points
at its past two meetings.
On the STOXX 600, energy, healthcare and
miners rose between 0.4% and 2% but were countered by a
sharp fall in bank stocks and consumer staples.
Meanwhile, geopolitical tensions intensified as Europe
investigated what Germany, Denmark and Sweden said were attacks
on two Nord Stream pipelines at the centre of an energy
Shares of fish farmers such as Mowi, Leroy Seafood
and SalMar dropped between 18% and 30% after
the Norwegian government proposed a resource tax on salmon and
trout farming of 40% from the tax year 2023.
(Reporting by Devik Jain, Amruta Khandekar and Susan Mathew in
Bengaluru and Dhara Ranasinghe in London; Editing by Subhranshu
Sahu, Savio D'Souza, Vinay Dwivedi and Jonathan Oatis)