European markets up 1.7% as travel stocks get a boost

LONDON — European markets were higher in morning trade, as investors assessed China’s reopening and awaited key European inflation figures.

The U.K.’s FTSE 100 rose 2.1%, while Germany’s DAX index was up 1.4% and France’s CAC 40 was up 1.2%.

Overall, the pan-European Stoxx 600 gained 1.6%, led by travel stocks, up 2.7%.

German preliminary inflation figures for December are due Tuesday afternoon, and are expected to show a fall on the previous month.

They will be followed by inflation figures from France on Wednesday, Italy on Thursday, and a flash estimate for the whole euro area on Friday.

U.K. markets were closed Monday, but shares across the rest of the continent rose as euro zone manufacturing data indicated that the worst may have passed for the 20-member currency bloc.

The figures offered hope of a light at the end of the tunnel, after a year beset by recession fears as central banks around the world hiked interest rates aggressively to rein in soaring inflation.

Meanwhile, markets in Asia-Pacific were mixed overnight as investors weighed the short-term implications of the rise in coronavirus infections in China against the potential longer-term boost from the full reopening of the world’s second-largest economy.

The Caixin purchasing managers’ index showed further declines in factory activity on surging Covid infections, but the survey also put business confidence around the 12-month outlook for output at its highest level since February 2022.

Global investors will also be watching for minutes from the Fed’s December policy meeting, due to be published Wednesday.

The central bank hiked rates by 50 basis points in December following four consecutive 75 basis point increases, and markets will be keen to gauge the likely trajectory of monetary policy in 2023.