European Stocks Open Higher Despite Middle East Tensions, ECB Rate Cut Optimism

European stocks began the day on a positive note, with investors seemingly overlooking the Middle East conflict escalation and focusing on optimism surrounding a potential interest rate cut by the European Central Bank (ECB). Airbus shares also experienced gains, driven by the company’s record annual orders for aircraft.

The European STOXX 600 index saw a 0.9 percent increase as of 8:016 GMT, heading towards a slight weekly gain.

ECB President Christine Lagarde’s comments on Thursday, stating that the most challenging phase of inflation may be behind us and signaling potential rate cuts if inflation drops to 2 percent, contributed to the positive sentiment.

The oil and gas sector observed a 1 percent rise, propelled by a more than two percent increase in crude prices following the United States and Britain’s strikes on Houthi military targets in Yemen. These actions heightened concerns about a potential escalation in the Middle East conflict.

In parallel, France reported a 4.1 percent year-on-year increase in consumer price inflation for December, primarily attributed to rising energy and service prices.

Airbus shares climbed by 2.2 percent after the aircraft manufacturer revealed record annual orders and confirmed an 11 percent surge in order deliveries for the year 2023. The positive developments in various sectors contributed to the overall optimism in European markets.