By Sruthi Shankar

(Reuters) – European stock markets rallied Thursday as easing crude oil prices provided relief for investors concerned about rising inflation. Positive earnings reports in the construction sector also contributed to positive sentiment.

The pan-European index rose 1.0% to reverse weekly losses, with buying seen across sectors barring oil & gas.

Recent volatility spikes in stocks markets have been caused by concerns about rising energy prices, which can lead to higher inflation and interest rates. There are also debt problems at China Evergrande property developer and the risks of tighter monetary policy.

Oil prices declined for a second session, following an unexpectedly high stock ebb. European gas futures also fell from records. [O/R]

Stuart Cole from Equiti Capital, Head of Macro Economics, stated that “the moves we have seen in the last couple of days were somewhat extreme — gas prices and oil prices some of the commodities, and the threats to stagflation.”

Cole stated that “you’re at an relative low and there’s always the chance of rebounding up”, but added that equity market are not in crisis.

After U.S. Senate Republican Leader Mitch McConnell revealed plans to extend borrowing limits into December, there was some relief on the U.S. Debt Ceiling front.

Sika rose by 3.1%, after the Swiss-based manufacturer of chemicals for construction said that it was able to overcome rising material prices and tight supply chain regulations in order to improve its sales and profit margins.

St Gobain, a French company that makes construction materials, has echoed the same tone and announced a stock buyback to increase its share price by 3.2%

Analysts are anticipating a slowdown of profit growth in the third quarter as post-pandemic recovery normalizes. According to Refinitiv data, analysts are expecting a 45.6% increase in profits at STOXX 600 businesses, as compared to a 152.6% rise in second-quarter.

Royal Dutch Shell (LON) – British oil giant fell 0.9% as it warned that the third-quarter loss of earnings would be $400 Million due to damage from August’s Hurricane Ida.

Hermes, a French manufacturer of luxury goods, saw a 2.9% jump after HSBC raised the stock’s status to “hold”, while Richemont, LVMH and Richemont were down. Kering All of the (PA) rose by about 2%

French auto parts manufacturer Valeo The (PA) rose 4.5% following. Citigroup (NYSE: ) Upgraded the stock, noting limited downside risks because of revisions to auto production estimates.