Banks push European shares higher as interest rates and recession fears grow

European shares rallied on Tuesday following a two-day sell-off with the banking sector supporting equities. However, concerns over a mounting energy crisis, interest rate hikes and an impending recession capped gains.

The pan-European Stoxx 600 index rose 0.4 percent, after declining about 2.5 percent in the previous two sessions, on the back of hawkish comments from the European and US central banks that boosted expectations of a rate hike.

Spain’s IBEX added 0.7 percent. Spain’s consumer price index rose 10.4 percent on an annual basis in August, down from 10.8 percent in the previous month, according to preliminary data.

The mining sector index fell 1.2 percent, affected by the decline in metal prices. The high cases of Covid-19 in China and the imminent rise in interest rates renewed concerns related to the demand for basic commodities.

Shares of Adventa jumped 15 percent to be the top gainer on the Stoxx 600 index, after the world’s largest classifieds company reported quarterly profit, as profits in its main markets rose 10 percent year on year.