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(Sharecast News) - European shares were higher on Monday as investors eyed interest rate decisions from around the globe due later in the week amid a looming trade war sparked by the US and a revision to world economic growth forecasts.
Helping investor sentiment came news that the US and Russian presidents were set to talk by phone on Tuesday, whilst the US congress managed to avert a government shutdown at the weekend.
The pan-regional Stoxx 600 index was up 0.79% at 550.94. Spain's Ibex 35 outperformed with a 1.09% rise to 13,147.20, while France's CAC was up by 0.57%.
The Organisation for Economic Co-operation and Development lowered its forecast for growth among G20 countries this year to 3.1%, down from 3.3% expected in December. Canada's growth forecast for 2025 was more than halved to 0.7% from 2%, while Mexico's economy was now forecast to contract this year, by 1.3%, down from a previous forecast of 1.2% growth.
Both countries are being targeted with large tariffs by US President Donald Trump. Overall, the 2025 global growth forecast has been cut to 3.1% from 3.3%.
Traders will be eyeing a raft of decisions from central bankers across the globe this week. With erratic tariff policy making coming from the US administration of President Donald Trump in recent weeks sparking fears of a major trade war, investors have become jittery about then prospect of a "Trumpcession" in the world's biggest economy.
Recessionary fears led to a sell-off on Wall Street last week, which had spilled over into European markets. US Treasury Secretary Scott Bessent in an interview broadcast on Sunday said there were "no guarantees" the US would not tip into recession.
"Rarely is one man dominant for financial markets and for central banks, however, Donald Trump's new economic policy means that he is centre stage as we wait to hear from a multitude of central bankers this week," said XTB research director Kathleen Brooks.
Monetary policy announcements are expected from the US, UK, Japan, Switzerland and Sweden, South Africa, Brazil, Russia and China.
US assaults on Yemeni Houthis pushed up the price of oil, with Brent crude up 0.53%, to $71.11.
In equity news, shares in UK defence contractor Qinetiq plunged 21% as the company said it would take a 140m impairment charge as tough market conditions persisted into the fourth quarter hitting work in its UK intelligence and US sectors, resulting in further delays to a number of contract awards.