European stocks close higher as investors assess interest rate outlook
This is CNBC's live blog covering European markets.
European markets were cautiously higher on Monday, coming off a losing week as hawkish comments from major central banks signaled further monetary policy tightening in 2023.
The Stoxx 600 closed 0.25% higher, with all major bourses ending in positive territory. Oil and gas stocks led gains, finishing trade up 1.7%, followed by insurance stocks, which were up 0.7%.
The European Central Bank hiked its key interest rate from 1.5% to 2% on Thursday and said it would look to shrink its balance sheet by around 15 billion euros ($15.9 billion) every month from March 2023 to the end of the second quarter. The ECB said rate hikes would need to continue "significantly at a steady pace."
The Bank of England and the Swiss National Bank struck similar tones and also opted for 50 basis point hikes, matching the U.S. Federal Reserve's decision on Wednesday. Fed Chairman Jerome Powell also indicated that the central bank's efforts to rein in inflation are far from over, and said policymakers will "have to stay at it."
The moves led the Stoxx 600 to two consecutive sessions of sharp losses, taking the European blue chip index to a near-five week low.
Markets in Asia-Pacific retreated overnight on Monday as traders struggled to look past recession fears, while Chinese officials vowed to stabilize the country's economy in 2023 and maintain ample liquidity in financial markets.
Stateside, U.S. stock futures inched fractionally higher in early premarket trade on Monday, after Wall Street's major averages posted their second consecutive week of losses for the first time since September.
Stocks on the move: Fortum, Freenet up; Volkswagen, Rheinmetall down
Finnish energy company Fortum remained the top riser among European stocks in afternoon trade, gaining 6% after finalizing a deal to sell its Uniper shares to the German government.
Energy giant Uniper is in the process of being nationalized after it nearly collapsed amid the European energy crunch.
German telecoms firm Freenet rose 5.6% on an upgraded rating from Deutsche Bank analysts from "hold" to "buy."
At the bottom of the Stoxx 600 index, Volkswagen shed 10.6%. Investors appeared disgruntled by the announcement Friday that CEO Oliver Blume would lead both Volkswagen and Porsche for the "long term."
Meanwhile German autos and arms manufacturer Rheinmetall fell 7%.
— Jenni Reid
Fortum agrees terms for Uniper sale to Germany
Fortum said it signed the final terms to be able to sell its shares of Uniper to the German government.
The government agreed to take over Fortum's Uniper shares in late September. The move essentially nationalizes the German gas importer as Europe's biggest economy tries to prevent gas supply shortages.
Fortum agreed to sell its Uniper shares for 500 million euros ($532 million) and get back a parent loan of 4 billion euros. Shares of Fortum are currently up 4.1%.
— Hannah Ward-Glenton
Volkswagen shares drop 10% after CEO criticism Friday
Shares of Volkswagen are down 10% after shareholders criticized CEO Oliver Blume Friday over his decision to head up both Volkswagen and Porsche, as reported by Reuters. Blume said he would be keeping both roles "long term" in a shareholder meeting Friday.
Some investors questioned whether Blume would have capacity to manage both car manufacturing giants at the same time and whether there could be conflicts of interest.
The vast majority of shareholders at Friday's meeting waved through a 9.6 billion euro ($10.2 billion) special dividend following Porsche's successful IPO in September.
— Hannah Ward-Glenton
CNBC Pro: Netflix is 'top pick' for 2023 despite ad target miss, Evercore's Mark Mahaney says
Netflix is a "top pick" stock for next year despite the streaming giant reportedly missing ad revenue targets, according to Evercore ISI.
Netflix shares closed lower by 8.63% on Thursday following a report that the company offered to refund money to advertisers for missing viewership targets.
CNBC Pro subscribers can read more about why Netflix is Mark Mahaney's favorite pick.
— Ganesh Rao