European shares rise as Telecom Italia jumps; miners cap gains

GERMANY: European shares rose on Monday, with Telecom Italia jumping to the top of the continent-wide STOXX 600 index, while mining companies slid after top consumer China set a modest annual growth target.

The STOXX 600 index was up 0.2%, after clocking its best week since the beginning of the year last week.

Shares of Telecom Italia (TIM) jumped 3.2% as Italian state lender CDP said on Sunday its board had approved a non-binding offer for the fixed-line network of the former phone monopoly that would be valid until March 31.

The European basic resources index slipped 1.9%, tracking the drop in prices of base metals after China set an economic growth target at about 5%, towards the lower end of expectations. However, luxury stocks, another China-exposed part of the European market, rose in early trading. Shares of LVMH , Kering and Hermes International rose between 0.2% and 1.3%.

Chris Beauchamp, chief market analyst at IG, said China is looking to boost the consumer side of the economy, gradually moving away from the old-fashioned stimulus that involved putting money into building roads, houses and railways. "As China's economy grows up and becomes more developed, in many ways that isn't linked to the heavy industrial side, which it has focused on a lot in the last 20 years."

Recent strong China data has kept investors hopeful of its recovery, boosting demand for European companies. Market participants are now awaiting January retail sales data for the eurozone later in the day, with expectations of a rise compared to declines in December.

Last week's inflation report showed underlying eurozone price pressures remained high in February, stoking worries that inflation is now stickier than markets were expecting. The focus this week will be on Friday's U.S. payrolls report after a blowout number for January sent bond yields surging and led to a repricing in expectations for the Federal Reserve's terminal policy rate.

Fed Chair Jerome Powell's two-day testimony before Congress, starting Tuesday, will also be in focus. Among other stocks, Belimo Holding slid 6.1% to the bottom of the STOXX 600 after the Swiss heating and ventilation solutions maker gave a cautious 2023 margin guidance.