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European stocks rise as monetary policy decisions take center stage

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LONDON — European stocks rose on Monday as attention shifted from the omicron Covid variant to monetary policy decisions by some of the world’s largest central banks.

The pan-European Stoxx 600 rose by 0.5%, with most sectors and major bourses in positive territory. Autos, basic resources and technology stocks led gains, all up by more than 1%.

The U.K.’s FTSE gained 13 points higher at 7,305, the German DAX was up 133 points at 15,757 and France’s CAC added 21 points at 7,014.

It is set to be an important week for monetary policy with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to make decisions this week.

It comes amid a growing focus on super-high inflation and how central bankers will react. On Friday, U.S. inflation came in at its fastest pace since 1982, but markets managed to shake it off with the S&P 500 clocking up its best week since February.

In his morning note Monday, Societe Generale Global Chief Economist Klaus Baader referred to a heavy central banks’ agenda this week.

He expects: “accelerated tapering and signals for an earlier rate hike by the Fed” and “intention to put the PEPP [pandemic emergency purchase program] on hold by the ECB.” He also sees the Bank of England “reluctantly” holding its position and the Bank of Japan keeping its accommodative stance.

U.S. stock futures are trading slightly higher early Monday. Meanwhile in Asia, markets jumped as traders overcame fears about the transmissibility and severity of the new omicron Covid variant.

The U.K. on Sunday raised its Covid threat level, with Prime Minister Boris Johnson warning of a “tidal wave” of Covid cases as a result of omicron. From this week, booster jabs will also be offered to all adults in England.

“It is now clear that two doses of vaccine are simply not enough to give the level of protection we all need,” Johnson said. “But the good news is that our scientists are confident that with a third dose, a booster dose, we can all bring our level of protection back up.”

On the data front in Europe, investors will be watching the Bank of England’s financial stability report and U.K. stress test results. Bank chief Andrew Bailey is expected to hold a press conference at 5:30 p.m. London time.

The OPEC group of major oil producers will also publish its closely watched monthly oil market report. Oil prices rose on Monday amid growing hopes that omicron’s impact will be less severe than initially feared and demand will remain robust.

When it comes to individual stock action, Credit Suisse announced an overhaul of its executive board early Monday.

Meanwhile, Santander was ordered on Friday to pay Andrea Orcel 68 million euros ($76.42 million) for withdrawing its offer of the position of CEO.

— CNBC’s Saheli Roy Choudhury contributed to this report.

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