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European Stocks Close Higher as Banking Concerns Continue to Ease; H&M Up 16%

Fabrice Coffrini | Afp | Getty Images

This is CNBC's live blog covering European markets.

European stock markets closed higher Thursday, continuing positive momentum from the previous three sessions as concerns over the banking sector ease.

The pan-European Stoxx 600 index closed 1% higher, with most sectors in the green. Retail stocks led the pack, up 3.7%, as H&M shares climbed more than 16% after the company reported a surprise first-quarter profit.

Tech stocks were up 2.5% as risk assets returned to favor, while banking stocks rose 1.5% as the sector looks to move past the recent spell of volatility. Food and beverages bucked the positive trend and dropped 0.4%.

UBS shares were up 3.4%. The stock ended Wednesday's session 3.7% higher after the bank announced Sergio Ermotti would return to his role as group CEO from April 5, following the recent acquisition of Credit Suisse. 

The chair of the European Union's banking Single Resolution Board, Dominique Laboureix, told CNBC's Silvia Amaro in a Wednesday interview, "During the three last years, the resilience of the European banking system was very strong based on very good solvency and very good liquidity and very good profitability."

"Based on that, I really believe there is good resiliency in our banking system. That does not mean that we don't have to be vigilant," he added.

Laboureix also stressed that the EU's banking union was committed to upholding the legal framework of writing down equity stacks before AT1 bonds in resolution decisions in Europe. Holders of the latter in Credit Suisse saw their assets wiped out during the UBS acquisition.

But discussing the U.S. hearing over the collapse of Silicon Valley Bank and Signature Bank, Barry Norris, CEO at Argonaut Capital, told CNBC's "Squawk Box Europe" the concerns it raised over a lack of regulation and the flight of deposits in the digital banking age were "not a one-off."

"What we've heard doesn't really get to the nub of the problem, which is that banks have been encouraged by regulation to invest in low credit risk, liquid assets, which is actually what got Silicon Valley, and in fact Signature, although Signature had other problems as well, into trouble. Essentially this was a bank with a cash flow problem ... Silicon Valley was solvent but it lacked liquidity to meet withdrawals."

Asia-Pacific markets closed mixed on Thursday, with Australia's benchmark index hitting a two-week high as concerns over the recent banking turmoil in the U.S. and Europe eased.

U.S. stocks rose Thursday, building on the sharp gains from the previous session, as traders bet the regional banking crisis has stabilized.

German inflation eases less than expected in March

German inflation eased in March, but still came in above analyst forecasts, according to provisional data from the federal statistics office. German consumer prices harmonized to compare with other European Union countries rose by 7.8% compared to the previous year, and increased by 1.1% compared to February.

Analysts had anticipated harmonized inflation would reach 7.5% in March, as reported by Reuters.

Higher food prices contributed to the uptick, having increased 22.3% compared with the same month of the previous year. The increase in energy prices slowed considerably compared to March 2022, when prices soared as a result of Russia's invasion of Ukraine.

— Hannah Ward-Glenton

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H&M extends gains after first-quarter results; shares up 16%

Shares of H&M have extended earlier gains to 16% after topping the Stoxx 600 index in the morning thanks to better-than-expected first-quarter results.

The company reported operating profit of 725 million Swedish crowns ($69.73 million), up from 458 million crowns the previous year and above a forecast of a 1.10 billion crown loss in a Refinitiv poll.

— Hannah Ward-Glenton

Digital ad platforms will probably grow by 7-8% in 2023, says S4 Capital CEO

Martin Sorrell, CEO of S4 Capital, discusses the company's earnings and outlook.

EU regulators distance themselves from Credit Suisse bond writedowns

European regulators distanced themselves from the Swiss decision to wipe out $17 billion of Credit Suisse's bonds in the wake of the bank's rescue, saying they would write down shareholders' investments first.

Dominique Laboureix, chair of the EU's Single Resolution Board, had a clear message for investors in an exclusive interview with CNBC.

"In [a banking] resolution here, in the European context, we would follow the hierarchy, and we wanted to tell it very clearly to the investors, to avoid to be misunderstood: we have no choice but to respect this hierarchy," Laboureix said Wednesday.

The full story is available here.

— Silvia Amaro

Spanish inflation drops to 3.3%

Lamb pieces displayed in a butcher's shop at a market stall on March 15, 2023, in Madrid, Spain.
Europa Press News | Europa Press | Getty Images
Lamb pieces displayed in a butcher's shop at a market stall on March 15, 2023, in Madrid, Spain.

Spain's annual inflation rate fell from 6% in February to 3.3% in March, official figures showed, with the main slowdown coming from electricity and fuel prices.

Analysts polled by Reuters expected a rate of 3.8%.

Month-on-month inflation was 0.4%, while core inflation, which strips out energy and food, dipped from 7.6% to 7.5%.

This year, the Spanish government has cut the value-added tax on food staples including bread, cheese, milk, fruit and vegetables to 0% from 4% amid sharply higher prices.

— Jenni Reid

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H&M tops stocks after surprise first-quarter profit

Swedish retail group H&M was up 11.8% in mid-morning trade, leading the Stoxx 600 index, after surprising to the upside in its first-quarter results.

The company reported operating profit of 725 million Swedish crowns ($69.73 million), up from 458 million crowns the previous year and above a forecast of a 1.10 billion crown loss in a Refinitiv poll.

The company had a boost from a re-valuation of its stake in second-hand clothing platform Sellpy, and said it would seek shareholder approval for a share buyback of up to 3 billion crowns.

— Jenni Reid

EU regulators will ‘fully and entirely’ respect write-down hierarchy if another bank fails

Dominique Laboureix, chair of the European Union's Single Resolution Board, said he wanted to send a clear message to investors that the regulator would uphold the legal framework for absorbing losses in the case of another bank failure.

Europe stocks open higher

Europe's benchmark Stoxx 600 index opened higher on Thursday and was up 0.8% at 8:30 a.m. in London.

Germany's DAX was up 1%, France's CAC 40 by 0.9% and the U.K.'s FTSE 100 by 0.4%.

All sectors climbed, with retail stocks up 2.5% after clothing group H&M posted a surprise first-quarter profit, boosting the stock by 9.7%.

Banks also continued to shake off recent worries, rising 1.3%.

— Jenni Reid

Euro zone underlying inflation sticky, says ECB's Schnabel

Picture Alliance | Picture Alliance | Getty Images
The rise in energy prices "may not drop out as quickly as it moves in," said European Central Bank board member Isabel Schnabel.

Underlying inflation in the euro zone is proving sticky, but the European Central Bank doesn't want to cause more pain by hiking rates too quickly, board member Isabel Schnabel said at an event in Washington on Wednesday evening, Reuters reported.

Meanwhile, the rise in energy prices "may not drop out as quickly as it moves in," she said.

Headline inflation in the euro zone fell from 8.6% to 8.5% in February, but core inflation, which strips out energy and food, rose from 5.3% to 5.6%.

The central bank next meets on May 4. Unlike before its March meeting, when it hiked by 50 basis points, it has not given firm guidance on what it expects to do.

ECB chief economist Philip Lane told Germany's Die Zeit newspaper more hikes are needed, while Peter Kažimír, head of Slovakia's central bank, has said the rate of hikes may need to slow.

— Jenni Reid

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UBS shares climb as old CEO returns

Shares of UBS jumped on Wednesday after the Swiss bank announced it was bringing back Sergio Ermotti as CEO to help oversee the absorption of Credit Suisse.

Ermotti, who previously served as the bank's CEO from 2011 to 2020. He will resume control on April 5th.

In a note to clients, Bank of America analyst Alastair Ryan cited Ermotti's "signature restructuring" of the bank during his previous tenure as a reason for investors would be happy with his return.

The Swiss-traded shares of UBS rose 4.4% following the announcement.

The stock is still down since the first week of March, when worries about the banking system on both sides of the Atlantic began.

— Jesse Pound

CNBC Pro: India has big manufacturing plans. Goldman names 2 global stocks to benefit — giving one 60% upside

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The investment bank called the plan a "substantial opportunity" for such firms, and names two stocks to buy, including a global tech giant. One of them has upside of nearly 60%.

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European markets: Here are the opening calls

European markets are heading for a higher open Thursday as concerns over the banking sector ease.

The U.K.'s FTSE 100 index is expected to open 8 points higher at 7,558, Germany's DAX 30 points higher at 15,341, France's CAC up 12 points at 7,194 and Italy's FTSE MIB 49 points higher at 26,301, according to data from IG.

Data releases include preliminary German inflation data for March and Italian producer prices for February.

— Holly Ellyatt

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