Benchmark indexes turned lower and bond yields spiked after central bankers stepped up campaign in support of higher interest rates. The UK economy expanded at a slower pace last year and is expected to decelerate further in the current year.
Benchmark index in Germany closed at the level seen in last February after the inflation index rose at a slower pace in January. Credit Suisse forecasted a substantial loss in 2023 after reporting the worst loss in 14 years.
French employment growth in the fourth quarter paused after seven quarters of growth in a row. The pace of growth in Italian retail sales slowed in December and extended the increase to the 19th month in a row.
French trade deficit widened in 2022 after energy imports soared three-fold, but exports jumped 18% after automobiles and aviation exports approached pre-pandemic levels.
European markets accelerated gains after the ECB and the BoE lifted rates and held out for more increases in March but dovish comments from the Fed Chairman contributed to positive sentiment. The euro rose to a 16-month high and the pound advanced to a six-month high.
European markets brace for higher rates from the Bank of England and the European Central Bank as policymakers focus on cooling inflation with the help of higher and restrictive interest rates.
The Euro Area avoided recession in the final quarter but economies in the currency block reported healthy economic growth in 2022 with Ireland leading the region. The IMF estimated the UK to face a mild contraction in 2023.
European markets traded lower ahead of the rate decision from the ECB later in the week. Germany's economy shrank in the final quarter but expanded in 2022 despite the challenges of supply chain and sky-high inflation.
The Euro Area M3 money supply growth slowed in December after credit growth to the private sector decelerated suggesting that the higher rates have begun to bite. Rolls Royce's newly appointed chief's tough talk stressed the urgency to transform the business and operations.
The euro retained upward bias and government bond yields inched lower despite the looming rate hikes in the region. UK's automobile production in 2022 dropped to lowest in 66 years on supply chain issues and structural changes.
