European shares bounce on hopes Omicron may be mild

Travel stocks helped European shares mark a strong start to the week on Monday, after sharp losses late last week, boosted by hopes that the Omicron variant of the coronavirus would be mild.

After third straight week in the red territory, the pan-European STOXX 600 (.STOXX) closed up 1.3%. The technology index was the only sector in the red, down 0.5%, tracking US peers.

Some concerns about the Omicron variant were eased after a South African health official said the strain caused mild infections, while top US infectious disease official Anthony Fauci told CNN, “it does not look like there’s a great degree of severity” so far. read more

That saw travel and leisure stocks rejoice, with the index (.SXTP) surging 3.9% and posting its best session since May.

Last week’s losses are likely to be taken back this week if people see that Omicron isn’t as deadly as previous strains, and as the European Central Bank adheres to their transitory inflation line.

The Euro STOXX 50 volatility index (.V2TX) slipped to 30.04 after spiking to 33.07 last week.

As oil climbed by USD 2 a barrel towards USD 72, the energy sector (.SXEP) rose 1.9%. Industrial stocks were led higher by Airbus (AIR.PA) after Saudi Arabian Military Industries signed an agreement with the planemaker to form a joint venture specialized in military aviation services.

Roche (ROG.S) rose 1.5% after the European Union’s drug regulator recommended extending the use of the drugmaker’s RoActemra arthritis drug for adult COVID-19 patients. read more

Investors are also watching out for key US inflation figures later this week that could settle the path for an interest rate hike by the Federal Reserve.