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European markets climb as investors monitor omicron and big week for central banks

LONDON — European stocks traded in positive territory on Tuesday morning, but sentiment remains cautious amid the continuing spread of the omicron Covid variant.

The pan-European Stoxx 600 climbed 0.4% in early trade, with basic resources adding 1.2% to lead gains as almost all sectors and major bourses nudged into positive territory. Autos slid 0.4%.

It comes after European stocks slipped Monday as traders reacted to developments regarding the omicron Covid variant. U.K. Prime Minister Boris Johnson confirmed yesterday that at least one patient infected with the new omicron variant of Covid-19 has died in the country.

Mainland China reported its first case of the omicron Covid variant Monday in the city of Tianjin, about a two hours’ drive from capital Beijing.

Investors are also focused this week on central bank action with the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank all due to announce monetary policy decisions.

The Federal Reserve’s two-day policy meeting begins Tuesday where the policymakers are expected to discuss speeding up the end of its bond-buying program.

The meeting comes as inflation data, released last Friday, came in at 6.8% in November year over year for the biggest surge since 1982. The print was marginally higher than the 6.7% Dow Jones estimate.

U.S. stock index futures inched higher during early premarket trading on Tuesday after the major averages started the week in the red as Covid omicron fears hit sentiment.

In Asia-Pacific markets overnight, Chinese stocks declined, tracking other losses in the region, as the omicron variant returned to focus. Meanwhile, bitcoin prices continued to tumble after some losses overnight.

U.K. employment data remained strong in November, with 257,000 staff added to payrolls, indicating that the end of the government’s furlough scheme has gone smoothly.

“Without the recent emergence of the Omicron variant, today’s U.K. labour market report would likely have been enough to convince the Bank of England to hike interest rates at Thursday’s meeting,” said Hugh Gimber, global market strategist at JPMorgan Asset Management.

“Sadly, Covid-19 is yet again confusing matters. With Omicron posing near-term risks to the growth outlook, and still much to learn about the real-world efficacy of vaccines, we expect policymakers to instead opt to keep rates on hold this week in the hope that the outlook has become clearer by February.”

Deals in focus

In terms of individual share price movement, Vifor Pharma shares surged more than 13% in early trade after Australian biopharmaceutical giant CSL offered to by the Swiss company for $11.7 billion.

At the bottom of the European blue chip index, Britain’s BT Group slid 5% after Altice U.K., the telecoms investment company controlled by French billionaire Patrick Drahi, increased its interest in the company’s voting share capital from 12.1% to 18%.

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— CNBC’s Pippa Stevens and Weizhen Tan contributed to this report.

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