* Retailers advance as UK unveils new stimulus
* United Utilities slumps after higher cost warning
* BT drops on govt review of Drahi's stake
May 26 (Reuters) - European markets rose on Thursday with
the retail sector leading the charge as Britain revealed new
stimulus plans, while the U.S. Federal Reserve sticking to its
monetary policy tightening script also bolstered risk appetite.
The pan-European STOXX 600 index closed higher for
a second straight session, up 0.8%. Gains were largely
broad-based, with retailers up 4.7%.
British retailers Ocado, Marks & Spencer,
Next and Primark owner Associated British Foods
rallied between 4.4% and 11.5% on hopes that a new 15 billion
pound ($19 billion) package of support for households struggling
to meet soaring energy bills will encourage them to keep
Luxury stocks also ticked up, with Louis Vuitton owner LVMH
up 3.7% - the biggest boost to the STOXX 600.
Sentiment remained fragile, however, on lingering worries
about slowing economic growth from central bank tightening.
On Wednesday, minutes of the Feds early May policy meeting
showed policymakers agreed to raise interest rates by 50 basis
points at the next two meetings to tame surging prices and also
discussed the possibility of pausing after July should inflation
start to ease.
Regionally, the European Central Bank is expected to begin a
hiking cycle in July.
While (Fed) minutes didnt really add much to the outlook
for monetary policy, they did at least calm fears that a faster
pace of tightening is on the way," said Chris Beauchamp, chief
market analyst at online trading platform IG.
"Beyond bargain hunting there seems little concrete
rationale for the bounce, which leaves investors wondering
whether next week will see yet another dramatic reversal in
Markets have had a volatile week, and the STOXX is set to
end yet another month lower as investors worry about the effect
of central bank tightening, the Russia-Ukraine war and Chinas
COVID-19 curbs on economic growth.
Fund managers expect the STOXX 600 to reach 450 points by
year-end - just about 3.5% higher from current levels, according
to a Reuters poll.
European utilities fell 1.2% on Thursday, limiting
gains. Water company United Utilities slumped 6.6% after
warning of higher costs in the current year. Other British
utilities also slipped on worries over an energy windfall tax
being extended to the sector.
BT Group slid 2.3% after Britain launched a national
security review of a deal by the telecoms group's biggest
shareholder Patrick Drahi to increase his stake to 18%.
Some markets in Europe, including Switzerland, Sweden and
Finland, were closed for a local holiday.
(Reporting by Susan Mathew in Bengaluru; Editing by Subhranshu
Sahu and Sriraj Kalluvila, Kirsten Donovan)