Europe open: Stocks start higher with US shares and dollar in focus

Stocks have started the morning sharply higher, tracking a bounce on Wall Street after the S&P 500 bounced off a key level of technical support, its 200-day moving average.

There was little on the economic agenda for Monday, although US president Donald Trump was expected to release his $1.5trn infrastructure plan.

"Given the tax reform, the recent budget concessions to keep the government open, and this infrastructure plan, it's no surprise to see investors looking at whether government bond yields are too low regardless of inflation.

"It's also worth noting that it’s a half-term week in the UK and parts of Europe so that could add to the liquidity fun and games in either direction," commented Jim Reid at Deutsche Bank.

In the background, the focus was on Wednesday's reading on the US consumer price index, with Reid pointing out that some recent seasonal adjustments from the BLS made it harder than usual to forecast Wednesday's US CPI report. Prior to those adjustments, January had consistently beat consensus projections over the past 25 years, he said, with the opposite being the case in February.

Against that backdrop, as of 0943 GMT the benchmark Stoxx 600 was higher by 1.46% or 5.36 points at 373.79, alongside a rise of 1.80% or 218.86 points to 12,326.57 in the German Dax and a rise of 1.41% or 71.45 points to 5,150.66 for the Cac-40.

In parallel, the yield on the benchmark 10-year German bund was adding three basis points to 0.778% and trading just off its 52-week high of 0.806%, while euro/dollar was edging higher by 0.07% to 1.2260.

On Friday, the S&P 500 finished higher by 1.5% at 2,619.55, bouncing back from an intra-day low that was just a smidgen below its 200-day moving average, then at 2,557.56, although WebFG UK's chief technical analyst, Jose Maria Rodriguez, said investors would do best by keeping an eye on 200-week support, then at 2,175.5.

To take note of, in remarks to Austria's ORF at the weekend, European Central Bank governing council member Ewald Nowotny reiterated his concerns that the US might be attempting to talk down the Greenback.

Nowotny also pointed out that recent positive economic data in the States was the inheritance of the Obama administration years and not the result of the current president's policies.

Meanwhile, in corporate news, Airbus shares were seeing some added selling pressure after the company was forced to suspend the delivery of its A320neo aircraft due to issues related to their Pratt & Whitney engines.

Some market commentary has picked up on a Frankfurter Allgemeine Sonntagszeitung report that BMW may be about to ink a 10-year supply contract for lithium and cobalt.