European stocks' relief rally fades, growth concerns rise

* Early bounce from Powell ruling out 75 bps rate hike fades

* Oil stocks notch up small gains in Europe

* Airbus soars after Q1 beat, A320 output hike plans

By Sruthi Shankar and Shreyashi Sanyal

May 5 (Reuters) - European stocks fell for the second straight session on Thursday, with most major sectors handing back earlier gains made after less hawkish comments from the Federal Reserve.

The pan-European STOXX 600 index .STOXX closed 0.7% lower, led by the travel and leisure .SXTP , banking .SX7P and insurance .SXIP sectors.

Investors were relieved after the Fed raised interest rates by 50 basis points on Wednesday, with Chairman Jerome Powell explicitly ruling out a 75 basis point hike in a coming meeting, but the rally in European stocks faded just as Wall Street opened lower on Thursday.

"European equity markets were firmly in positive territory this morning, but the aggressive move lower in the U.S. is hurting stocks on this side of the Atlantic," said David Madden, market analyst at Equiti Capital.

"It seems that fears about lower growth in the U.S. are still in circulation despite the Fed not acting excessively hawkish."

Worries about quicker interest rate increases, China's COVID lockdowns, the Ukraine conflict and surging inflation have all weighed on stock markets this year, dragging the STOXX 600 down more than 10% so far.

"The rise in energy prices and inflation happened quite quickly and that's taken people by surprise, so there is an element of sticker shock," said Niall Gallagher, investment director for European equities at GAM Investments.

Credit Suisse CSGN.S fell 2.8% after it froze 10.4 billion Swiss francs ($10.63 billion) of wealthy clients' assets in the first quarter under sanctions imposed in connection with Russia's invasion of Ukraine.

Airbus AIR.PA gained 6.3% after the world's biggest planemaker reported a higher-than-expected quarterly profit and firmed up record plans for a 50% hike in key narrowbody jet output.

Oil giant Shell SHEL.L rose 3.1%, lifting the oil and gas sector .SXEP , after reporting a record first-quarter profit of $9.13 billion, boosted by higher oil and gas prices and a strong performance of its trading division.

About half of the STOXX 600 companies have reported quarterly results so far, and 71% of those have topped analysts' profit estimates, as per Refintiv IBES data. Typically, 52% beat estimates in a quarter.

Overall, first-quarter earnings for European companies are expected to grow 35.4%, up from 20.8% at the start of the earnings season.

The European Central Bank (ECB) is expected to raise interest rates later this year. Euro zone inflation hit a record high 7.5% in April, nearly four times the ECB's target, but the central bank has been slow to move amid concerns about a weakening economy.
Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru Editing by Sriraj Kalluvila and Mark Potter

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.