European Markets Close Mostly Higher

(RTTNews) - The major European stocks closed slightly higher on Monday with investors largely making cautious moves, reacting to the results of the German federal election, and ECB President Christine Lagarde's comments that inflation in the euro area could exceed projections but price increases are likely be temporary.

Olaf Scholz of the center-left Social Democrats defeated Chancellor Angela Merkel's conservatives in an extremely tight German federal election, setting in motion what could be months of complex coalition talks to decide who will lead Europe's biggest economy.

The left wing Die Linke party fell below the 5% threshold needed to enter parliament.

The U.K.'s FTSE 100 gained 0.17%, Germany's DAX climbed 0.27% and France's CAC 40 moved up 0.19%, while Switzerland's SMI tumbled 1.07%. The pan European Stoxx 600 edged down 0.19%.

Among other markets in Europe, Austria, Belgium, Czech Republic, Greece, Iceland, Norway, Portugal, Russia, Spain and Turkey closed higher.

Denmark, Finland, Ireland, Netherlands and Sweden drifted lower, while Poland ended flat.

In the UK market, energy stocks moved higher as Brent futures headed for $80 per barrel on supply concerns and amid optimism over rising demand. Royal Dutch Shell, BP and TotalEnergies all closed with strong gains. BP said that nearly a third of its British petrol stations had run out of the main grades at almost a third of its stations following intense demand and a shortage of truck drivers.

Rolls-Royce Holdings shares soared more than 11% after the aerospace company was selected to provide the powerplant for the B-52 Stratofortress under the Commercial Engine Replacement Program.

IAG climbed 6%. British Land, Compass Group, Land Securities, Associated British Foods, HSBC Holdings, Prudential, BT Group and Whitbread gained 2 to 4%.

Experian, Halma, Croda International, Spirax-Sarco Engineering, RightMove, Admiral Group, Astrazeneca, Segro, Intertek Group, Rentokil Initial, JD Sports Fashion and Smith (DS) declined 2 to 4.5%.

In the French market, Unibail Rodamco, Technip, Air France-KLM and Accor gained 5 to 7%. Vinci, Credit Agricole, Sodexo, Safran, Societe Generale, BNP Paribas, Thales and Renault moved up 2.5 to 4%.

Biocorp shares rose sharply after the medical devices company announced an agreement with Danish pharmaceutical company Novo Nordisk A/S (NVO) for the development and distribution of a Mallya smart add-on device for the Novo Nordisk FlexTouch pen used by people with diabetes.

Teleperformance, Dassault Systemes and Hermes International ended lower by 3 to 4%.

In Germany, BASF rallied sharply after it signed a Memorandum of Understanding with Sanyo Chemical for the joint development and access to technologies to create advanced polyurethane dispersions.

Deutsche Bank, MTU Aero Engines, Henkel, Daimler, Vonovia, Allianz, Bayer, Continental, Airbus Group, Munich RE, BMW, Porsche Automobil, Volkswagen and Covestro gained 1 to 2.5%.

Zooplus gained more than 4% after Swedish private equity firm EQT AB made an offer to buy the online pet supplies' retailer for about 3.36 billion euros ($3.94 billion).

HelloFresh, Merck, Symrise, Zalando, Deutsche Post, Adidas and Sartorius ended lower by 1 to 4%. Sartorius announced that it plans to expand its presence in Michigan by opening a new 130,000-square-foot state-of-the art plant in Ann Arbor in late 2023.

European Central Bank President Christine Lagarde said Monday that it was possible that the euro area inflation could become stronger, but the risks of such a scenario were limited.

"While inflation could prove weaker than foreseen if economic activity were to be affected by a renewed tightening of restrictions, there are some factors that could lead to stronger price pressures than are currently expected," Lagarde said at a virtual hearing of the European Parliament.

Eurozone money supply growth accelerated in August, while credit to the private sector slowed further, data published by the European Central Bank showed on Monday.

The broad money supply M3 grew 7.9% year-on-year in August, following July's 7.6% increase. M3 was forecast to advance 7.8%.

As regards the dynamics of credit, data showed that credit to the private sector logged an annual growth of 3.1%, slower than the 3.4% increase in July. Adjusted loans to the private sector also grew at a slower pace of 2.9% after climbing 3% in July.

Germany's inflation is likely to rise sharply from the current level due to the VAT reduction in the previous year, Bundesbank said in its monthly report on Monday.

"From today's perspective, rates between 4% and 5% are temporarily possible from September until the end of the year" the bank said.