European stocks rose on Tuesday after a string of upbeat earnings, while bank stocks rose as government bond yields hit new highs in anticipation of faster interest rate hikes by global central banks to fight against soaring inflation.

The pan-European STOXX 600 index climbed 0.6%, rebounding from a “flash crash” in the previous session caused by a single sell order from Citigroup Inc. Economically sensitive sectors such as banks, oil and gas and automakers rose about 2% each, leading Tuesday morning’s gains as German 10-year bond yields hit 1% for the first time since June 2015.

Overnight, the 10-year US Treasury yield hit 3% for the first time since December 2018 ahead of a Federal Reserve meeting on Wednesday, where policymakers are expected to raise the rate by 50 basis points to contain the surge in price. European equities are emerging from a difficult April, as concerns over an aggressive monetary policy tightening, China’s COVID lockdown and conflict in Ukraine fueled concerns over a sharp global economic slowdown.

“So far this year, much of the narrative has been focused on inflation and interest rates. What markets are now trying to price in is a slowdown in global growth and its impact on monetary policy going forward,” said Dan Boardman-Weston, chief managing director at BRI Wealth Management. “What you’re seeing right now is a struggle in the markets over which forces are going to win – will it be inflation, recession or stagflation, which is the worst of both worlds.”

French bank BNP Paribas jumped 3.4% on posting a better-than-expected 19% rise in net profit as trading soared and reaffirmed its medium-term profitability targets. German logistics company Deutsche Post rose 0.7% after reporting higher first-quarter revenue and operating profit and confirming financial targets for 2022-24.

Norwegian aluminum maker Norsk Hydro fell 4.7% as it reported record quarterly profits that beat expectations, but also warned of rising costs ahead due to inflation and logistical disruptions. Nearly half of the STOXX 600 companies have reported Q1 results so far, and 71% of them beat analysts’ earnings estimates, according to Refinitiv IBES data, with the biggest beats coming from energy and materials sectors.

BP rose 3.1% as a strong operating performance on the back of soaring oil and gas prices helped the British energy company step up its share buybacks. German chemical maker Covestro fell 6.7% after warning that COVID-19 shutdowns in China would significantly affect business in the second quarter.

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