by Diana Mandia

(Reuters) – European stocks ended in disarray on Monday as uncertainty over inflation and central bank monetary policy took over after OPEC+’s unexpected decision to cut oil production from May.

In Paris, the CAC 40 ended up 0.32% at 7,345.96 points. The British Footsie gained 0.54% and the German Dax lost 0.31%.

The EuroStoxx 50 index ended down 0.18%, the FTSEurofirst 300 0.12% and the Stoxx 600 0.03%.

The unexpected decision by OPEC+ to further cut production from May, announced by producing countries on Sunday in a bid to maintain market stability, helped crude prices register their largest daily increase since a month on Monday. year, with Brent rising 5.83% to 84.55 dollars a barrel and US light crude (West Texas Intermediate, WTI) 6% to 80.21 dollars.

The effects that higher oil prices could have on inflation haunted markets on Monday, as investors seemed relieved by the latest inflation data from Europe and the United States released on Friday, which, while remaining at elevated levels, showed signs of slowing and raised hopes of a pause in the rise in interest rates.

While investors were digesting the OPEC+ announcements, the publication of the ISM index on manufacturing activity in the United States, which fell in March to its lowest level for almost three years, helped to calm some fears over inflation and, more importantly, fueled hopes for a looser policy from the central bank, which pushed bond yields lower towards the end of the session in Europe.

The PMI indices for March also highlighted contractions in the manufacturing sector in the euro zone as a whole, in France and in Germany.

VALUES

The oil sector benefited Monday from the rise in crude prices, the compartment taking 4.07% and, among companies, TotalEnergies, BP, Shell and Eni granting themselves from 5.8% to 4.2%.

Against the current, UBS dropped 2.8%, the Swiss Federal Prosecutor’s Office having opened an investigation into the takeover of Credit Suisse.

Stocks heavily exposed to energy prices, including airlines Air France-KLM and low-cost carriers Ryanair and Wizz Air ended in the red.

AT WALL STREET

At the close in Europe, the New York Stock Exchange was struggling to find direction: the Dow Jones gained 0.09%, the Standard & Poor’s 500 was almost flat and the Nasdaq lost 0.31% XXX%.

The S&P 500 energy index was up 5.2%, supported by rising crude prices.

CHANGES

The dollar index, which measures the variations of the greenback against a basket of currencies, dropped 0.35% after the publication of the American ISM manufacturing index for March.

The euro took the opportunity to rise to 1.0886 dollars.

RATE

Yields on US government bonds, which rose at the start of the day on inflation fears, fell on Monday at the close of markets in Europe after the publication of the index of manufacturing activity in the United States and hope for a possible pause in rising interest rates.

The two-year thus fell by more than eight basis points to 3.9738%, a drop similar to that of its ten-year equivalent which also dropped eight basis points to 3.4095%.

In Europe, the ten-year German Bund yield fell around seven points to 2.238% on Monday and its two-year equivalent fell five basis points to 2.66%.

“The failure of the US manufacturing ISM caught bond markets off guard,” said Antoine Bouvet, head of rates strategy at ING in Europe.

Markets may well conclude that higher oil prices will not cause inflation to pick up if activity is already in decline, he said.

(Editing by Kate Entringer)

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