European shares close higher as banks lead

The pan-European STOXX 600 closed 0.82% higher at 582.97, putting it 0.6% away from a record high

European shares closed higher on Monday in broad-based gains led by banks, kicking off a week packed with central bank decisions, as investors returned to risk assets after last week’s subdued finish.

The pan-European STOXX 600 closed 0.82% higher at 582.97, putting it 0.6% away from a record high. Major regional bourses also gained, with Spain’s ending at a record close – up 1.2%.

The STOXX 600 slid into negative weekly territory at the last moment on Friday.

The market staged a broader recovery on Monday, with 19 of the 20 main sectors trading higher, led by heavyweight banks, which gained 1.8% to close at a level last seen in May 2008.

Insurers rallied a 1.2% jump, and travel stocks climbed 1.3%, further boosting the main index.

XTB’s research director Kathleen Brooks said that risk sentiment was stabilizing after the sell-off as markets turned their attention to macroeconomic factors this week.

An index of automakers was the only exception, down 0.14%, after two straight days of gains. The losses were limited by an expected reprieve for regional carmakers, with Brussels set to reverse the EU’s effective ban on sales of new combustion‑engine cars from 2035.

On the macro front, the European Central Bank’s monetary policy decision is due on Thursday, with markets widely expecting it to keep rates on hold.

Market sentiment shifted last week following unexpectedly hawkish comments from ECB policymaker Isabel Schnabel, who suggested a rate hike could be the next move, though it would not happen in the near term.

Decisions from Sweden’s Riksbank, the UK’s Bank of England and Norway’s Norges Bank are also expected this week.